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

                                    FORM 10-K

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



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


FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999    COMMISSION FILE NUMBER 33-67738

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

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

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


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

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



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

                                      None.

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

                                      None.

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

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


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                                TABLE OF CONTENTS
                                     PART I
Item 1.  Business
                  General
                  Industry Overview
                  Racing Schedules
                  Sources of Revenue
                  Purses and Horsemen's Agreements
                  Marketing and Business Development
                  Competition
                  Seasonality of Racing
                  Employees
                  Regulation and Taxation

Item 2.  Properties

Item 3.  Legal Proceedings

Item 4.  Submission of Matter to a Vote of Security Holders

                                     PART II

Item 5.  Stockholder Matters

Item 6.  Selected Financial Data

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.  Financial Statements and Supplementary Data
                  Report of Independent Certified Public Accountants
                  Consolidated Balance Sheets
                  Consolidated Statements of Operations
                  Consolidated Statements of Partners' Deficit
                  Consolidated Statements of Cash Flows
                  Notes to Consolidated Financial Statements

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

                                    PART III
Item 10.  Directors and Executive Officers

Item 11.  Executive Compensation

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Item 13.  Certain Relationships and Related Transactions

                                     PART IV

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


                           SAM HOUSTON RACE PARK, LTD.

                                     PART I

ITEM 1.           BUSINESS

   GENERAL

      Sam Houston Race Park, Ltd., a Texas limited partnership (the
"PARTNERSHIP"), owns and operates Sam Houston Race Park, a Class 1 horse racing
facility located within the greater Houston metropolitan area (the "RACE PARK").
The Race Park offers pari-mutuel wagering on live thoroughbred and quarter horse
racing and on horse and greyhound races simulcast from other racetracks. The
managing general partner of the Partnership is SHRP General Partner, Inc. (the
"MANAGING GENERAL PARTNER"), a wholly owned subsidiary of MAXXAM Inc.
("MAXXAM"). The Partnership is also comprised of an additional general partner,
SHRP Equity, Inc. (the "ADDITIONAL GENERAL PARTNER") and limited partner
interests. As of December 31, 1999, various wholly owned subsidiaries of MAXXAM
held, directly or indirectly, an aggregate of 98.9% of the equity in the
Partnership and 99.0% of the Partnership's 11% Senior Secured Extendible Notes
(the "EXTENDIBLE NOTES").

      This Annual Report on Form 10-K contains statements which constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements appear in the sections to this
Item entitled "Sources of Revenue-Simulcasting," "--Marketing and Business
Development," "--Competition" and "--Regulation and Taxation-Regulations on
Simulcasting" and "--Taxation." These statements also appear in a number of
other places (see Item 3. "Legal Proceedings," Item 5. "Stockholder Matters" and
Item 7. "Management's Discussion and Analysis of Financial Condition and Results
of Operations--Results of Operations," and "--Liquidity and Capital Resources").
Such statements can be identified by the use of forward-looking terminology such
as "believes," "expects," "may," "estimates," "will," "should," "plans" or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy. Readers are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
significant risks and uncertainties, and that actual results may vary materially
from those in the forward-looking statements as a result of various factors.
These factors include the effectiveness of management's strategies and
decisions, general economic and business conditions, new or modified statutory
or regulatory requirements, and changing prices and market conditions. This
report identifies other factors that could cause such differences. No assurance
can be given that these are all of the factors that could cause actual results
to vary materially from the forward-looking statements.

   INDUSTRY OVERVIEW

      Pari-mutuel wagering is pooled wagering, under which bettors wager against
each other, not the racetrack. Wagering pools are regular wagering pools,
multiple two wagering pools and multiple three or more wagering pools. Examples
of regular wagers include win (a wager on a specific horse to finish first),
place (a wager on a specific horse to finish first or second) and show (a wager
on a specific horse to finish first, second or third). Examples of multiple two
wagers include daily double (a wager in which the bettor selects the horses that
will win two separate races), quinella (a wager in which the bettor selects the
horses that will finish first and second, in any order) and exacta (a wager in
which the bettor selects the horses that will finish first and second, in the
correct order). Examples of multiple three or more wagers include trifecta (a
wager in which the bettor selects the horses that will finish first, second and
third, in order), superfecta (a wager in which the bettor selects the horses
that will finish first, second, third and fourth, in order), and the pick three
(a wager in which the bettor selects the winner of three consecutive races). A
computerized totalisator system is used to total the amounts wagered and
calculate the payouts for each pool based on the amounts wagered on various
horses and on the possible outcomes.

      Pari-mutuel wagering is conducted in a majority of states in the United
States and all provinces in Canada. The industry includes racetracks which
conduct thoroughbred, quarter horse, harness and greyhound racing and off-track
wagering facilities which receive simulcast broadcasts from various racetracks
but do not conduct live racing. Off-track wagering is regulated by the
individual states in the United States and is not legal in Texas and certain
other states. Simulcasting is the process by which live races held at one racing
facility are broadcast simultaneously to other locations at which additional
wagers may be placed on the race being broadcast. Guest simulcasting is the
process whereby the Race Park receives broadcasts from other racetracks. Host
simulcasting is the process whereby other racetracks receive broadcasts from the
Race Park. Simulcasting is regulated by individual states in the United States
and is authorized in Texas but is not currently authorized in all states.

      For every dollar wagered at the Race Park, a percentage, as defined by
state law, is returned to the winning bettors, and the remaining percentage,
referred to as the "takeout," is collected by the racetrack. As discussed in
more detail below, a percentage of the takeout is reserved for purses to be paid
to the owners of future winning horses or greyhounds, as fees and taxes to the
state of Texas and as contributions to organizations whose purpose is the
furtherance of horse breeding in Texas. The takeout remaining after these
deductions is retained by the racetrack and constitutes the racetrack's primary
source of revenue. The Partnership's Consolidated Financial Statements and Notes
thereto appearing in Item 8 contain additional information regarding the
Partnership's revenues and costs of pari-mutuel operations.

   RACING SCHEDULES

      The Race Park currently conducts live thoroughbred or quarter horse racing
four days a week during meets and conducts simulcasting seven days a week year
round. The Texas Racing Commission (the "RACING COMMISSION") must approve the
number of live race days that may be offered at the Race Park each year. The
number and scheduling of race days at the Race Park depends upon a number of
factors, including scheduling of live race days at other Texas Class 1 horse
racing facilities. Under the Rules of Racing for the state of Texas (the "RULES
OF RACING"), Class 1 racetracks may not have overlapping live race schedules for
the same breed of horse with other Class 1 racetracks unless each track with
overlapping schedules consents. The Racing Commission has licensed two other
Class 1 horse racetracks: Retama Park near San Antonio and Lone Star Park at
Grand Prairie near Dallas.

      The Race Park conducted 134 days of live racing during 1999, consisting of
90 days of thoroughbred racing and 44 days of quarter horse racing. For the 2000
calendar year, the Race Park has obtained approval to conduct live racing on 136
days consisting of (i) 57 days of thoroughbred racing beginning on January 1,
2000 and concluding on April 9, 2000, (ii) 45 days of quarter horse racing
beginning on June 30, 2000 and concluding on September 10, 2000 and (iii) 34
days of thoroughbred racing beginning on November 2, 2000 and concluding on
December 30, 2000. The Race Park has not yet determined what race dates it will
request in 2001 and years thereafter. The Race Park also expects to continue
offering simulcast wagering 364 days a year.

   SOURCES OF REVENUE

      Wagering on Live Races
      The Texas Racing Act (the "RACING ACT") provides for the takeout
percentage on live races depending on the type of wager. The total takeouts are
approximately 18%, 21% and 25% from regular wagering pools, multiple two
wagering pools and multiple three or more wagering pools, respectively. The
Racing Act also provides that a minimum of 7% of all live regular wagering pools
and live multiple two wagering pools and a minimum of 8.5% of all live multiple
three wagering pools be reserved for purses to be paid to the owners of future
winning horses. Furthermore, through December 31, 1998, the state of Texas
received 1% of the first $100 million wagered on live racing at each racetrack
each year (plus higher percentages for wagering over $100 million). Subsequent
to December 31, 1998, this tax was eliminated on the first $100 million wagered.
Finally, 1% of live multiple wagering pools is required to be set aside for
Texas horse breeding programs. During 1999, the Race Park retained, on the first
$100 million wagered on live horse racing, 11% of regular wagers, 13% of wagers
involving two horses and 15.5% of wagers involving three or more horses after
giving effect to the foregoing payments. The betting patterns experienced by the
Race Park during its operating history have averaged approximately 38%, 28% and
34% of dollars wagered in the regular, multiple two and multiple three or more
wagering pools, respectively.

      Simulcasting
      The Race Park currently offers guest simulcast wagering on horse races
seven days a week throughout the year and intends to continue doing so. As of
March 1, 2000, the Race Park had agreements with approximately 50 racetracks
pursuant to which it, at various times, receives simulcast signals. The maximum
takeout percentages on guest simulcast racing broadcasts from Texas racetracks
are the same as those for live racing. The takeout percentages on guest
simulcast racing broadcasts from out-of-state tracks are established by each
state but are generally within a few percentage points of the takeout
percentages in Texas. The Race Park sets aside amounts from each wagering pool
for purses to be paid to the owners of future winning horses in varying amounts.
See "Purses and Horsemen's Agreements" below. Furthermore, as of September 1,
1997, the Racing Act required the allocation of 1.25% of all simulcast wagering
pools for the state of Texas, 0.25% for the state of Texas for funds previously
appropriated to administer and enforce the Racing Act, and 1% of all simulcast
multiple wagering pools for Texas horse breeding programs. As of January 1,
1999, the allocation to the state of Texas was reduced by .25% to 1.0%.
Effective July 9, 1999, the 0.25% to the state of Texas was eliminated. The Race
Park also pays broadcasting racetracks a fee which averages approximately 3% of
the amount wagered by its patrons on the broadcast races. After giving effect to
the foregoing, the Race Park receives net commissions normally ranging from 6%
to 10% on guest simulcast betting at the Race Park.

      The Race Park also began offering guest simulcast wagering on greyhound
races during March 1998 under cross-breed simulcasting provisions contained in
the amendments to the Racing Act enacted during the 1997 legislative session
(the "1997 AMENDMENTS"). Wagering on greyhound signals accounted for 19.4% of
the guest wagering handle and 15.3% of total net-pari mutuel commissions for
1999.

      The maximum takeout percentages on cross-breed simulcast racing broadcast
from Texas racetracks and out-of-state racetracks are approximately equal to
those percentages used for horse racing described above. Under the 1997
Amendments, 5.5% of each wagering pool was set aside for greyhound purses.
Effective January 11, 2000, the rate for interstate greyhound wagering pools was
reduced by 0.5% to 5.0% for greyhound purses and an additional 1% was allocated
to horse purses. In addition, the 1997 Amendments required the allocation of
1.5% of all simulcast wagering pools for the state of Texas, 0.25% for the state
of Texas for funds previously appropriated to administer and enforce the Racing
Act and 1% of all simulcast multiple wagering pools for Texas greyhound breeding
programs. As of January 1, 1999, the 1.5% allocation for the state of Texas was
reduced to 1.25%. Effective July 9, 1999, the 0.25% to the state of Texas was
eliminated. Also, the Race Park receives 1.5% of wagering on out-of-state horse
racing placed at the greyhound track located in the greater Houston metropolitan
area ("GULF GREYHOUND"). The Race Park is required to pay 1.5% of amounts
wagered on out-of-state greyhound tracks to Gulf Greyhound. Broadcasting race
tracks are paid a fee by the Race Park that normally ranges from 2.5% to 3.0% of
amounts wagered. After giving effect to the foregoing, the Race Park expects to
receive net commissions normally ranging from 8% to 14% on cross-breed simulcast
wagering at the Race Park.

      The Race Park receives commissions from host simulcasting averaging
approximately 3% of the amount wagered at the receiving track on the Race Park's
races. A portion of this fee is reserved for purses to be paid to the owners of
future winning horses, as described in "Purses and Horsemen's Agreements" below.
The Race Park also receives 4.5% of the amount wagered at greyhound tracks
located in Texas on races conducted at the Race Park which is to be reserved for
purses. Through September 30, 2000, the Race Park also receives 80% of the purse
funds generated from interstate wagering on horse racing at greyhound tracks
located in Texas under a ruling by the Texas Racing Commission. Such ruling may
remain in effect or be revised for periods subsequent to September 30, 2000. As
of March 1, 2000, the Race Park had agreements with approximately 246 racetracks
and off-track wagering outlets pursuant to which the Race Park, at various
times, broadcasts its races.

      Simulcasting is an important component of the Race Park's revenues. Guest
simulcasting and host simulcasting accounted for approximately 60% and 22%, 64%
and 20%, and 63% and 20%, respectively, of the Race Park's net commission
revenues during the years ended December 31, 1999, 1998 and 1997, respectively.

      Food and Beverage Sales
      Food and beverage sales are another major source of revenue and include
catering, restaurant and concession sales. A broad selection of food is
available to the patrons of the Race Park, from table dining at the clubhouse
level to food court fare at various concession stands throughout the Race Park.

      Other Revenues
      Other major sources of revenue include admission, program and parking fees
as well as sponsorship agreements and sales of finish line boxes, tables and
luxury suites. An admission fee is charged for entry to the Race Park. Preferred
and valet parking are available for a fee during live racing. The Race Park also
sells programs for live and simulcast racing, various editions of The Daily
Racing Form and "tip" sheets. The clubhouse level contains finish line boxes,
finish line reserved tables and reserved seating available for sale on a daily
or seasonal basis. Luxury suites are also available for rental on a long-term or
daily basis. The clubhouse level also contains the Jockey Club which has a
capacity of approximately 300 people. Individual and corporate memberships to
the Jockey Club are available for sale.

   PURSES AND HORSEMEN'S AGREEMENTS

      Under the Rules of Racing, the Racing Commission has recognized the Texas
Horsemen's Partnership, L.L.P. (the "THP") as the official horsemen's
organization for the state of Texas. The recognized horsemen's organization is
responsible for negotiating with the Partnership on behalf of all horsemen at
the Race Park regarding, among other things, the distribution of purses and
guest and host simulcasting agreements. The THP is comprised of two partners,
the Texas Thoroughbred HBPA, Inc. (representing owners of thoroughbred horses)
and the Texas Horsemen's Benevolent and Protective Association (representing
owners of quarter horses). The Partnership has entered into agreements with each
partner (the "THP AGREEMENTS"), which expire on December 31, 2001. Under the
terms of the contracts, during 1997, the Race Park reserved 30% of the takeout
from guest simulcasting and 30% of the commissions received from host
simulcasting for purses to be paid to the owners of future winning horses. The
percentage reserved for purses increased to 31% during 1998. In accordance with
the 1997 Amendments, the amount reserved for purses from guest simulcasting was
mandated by law as of January 1, 1999. The amounts specified in the amended
Racing Act approximate 7% of all regular and multiple two horse live wagering
pools and 8.5% of all multiple three horse live wagering pools. The amounts
specified to be set aside from the takeout from guest simulcast pools is 38.8%
of all regular wagering pools; 33.3% of all multiple two wagering pools, and 34%
of all multiple three or more wagering pools. The percentage reserved for purses
from host simulcasting increased from 31% to 32.5% of commissions received in
1999, 34.5% in 2000 and will increase to 37.0% in 2001, in accordance with the
THP Agreements and Texas Racing Commission rules. Both contracts specify that
all guest and host simulcasting agreements are approved by the horsemen although
horsemen may withdraw this approval only for matters involving the integrity or
best interests of racing.

      In accordance with industry practice, the Race Park establishes purses in
advance of each live race meeting, based on projected purse funds available and
purse funds projected to be generated during the meet. These established purses
are reviewed and/or adjusted monthly and are published in a condition book which
generally covers fifteen days of racing. Horsemen then enter their horses in the
proposed races based on the conditions of the race, including the purse offered.
At any given time, purses generated from wagering may be higher or lower than
the amounts included in the projections used to complete the condition book.
Therefore, during a live race meet, purses may be over or under paid. Under the
terms of the THP Agreements, the Partnership has the ability to manage the level
of purses paid so that purses paid are approximately equal to purses generated
from wagering within a certain period of time; however, there can be no
assurance that any adjustments necessary will be sufficient. When purses paid
exceed purses generated within a certain period of time, the excess payments
become an additional expense to be paid by the Partnership. During 1994, the
Partnership paid purses in excess of purse funds generated of approximately $4.0
million. Under various amendments to the agreement in effect during 1994, the
Partnership has recovered $1.7 million of these purse overpayments, of which
$0.7 million was recouped in December 1999. The agreement between the
Partnership and the Texas Thoroughbred HBPA, Inc. also provides for the
Partnership to recover an additional $0.6 million in 2000. The Partnership will
record any future recoveries only as they are earned and received.

      During the years ended December 31, 1999, 1998 and 1997, the Race Park has
paid purses and breeders awards of approximately $13.0 million, $11.1 million
and $9.4 million, respectively. The average daily thoroughbred purse paid
increased from $65,000 to $107,000 during the three-year period. The average
daily quarter horse purse paid increased from $54,000 to $70,000 during the
three-year period.

   MARKETING AND BUSINESS DEVELOPMENT

      Management of the Race Park believes that the majority of the patrons for
the Race Park reside within a 20 mile radius of the Race Park, which includes
the greater Houston metropolitan area, and that a secondary market of occasional
patrons can be developed outside the 20 mile radius but within a 50 mile radius
of the Race Park. Management recognizes the challenge of introducing pari-mutuel
wagering to customers in the greater Houston metropolitan area and has
established the following marketing goals to increase attendance and the
wagering handle: (i) promote the excitement of horse racing and wagering, (ii)
support and expand the existing group of core bettors, (iii) attract new fans
currently unfamiliar with horse racing, and (iv) pursue a program of fan
education to teach these new fans how to wager. Management uses a number of
marketing programs to have potential customers consider the Race Park as an
entertainment alternative. These programs are designed to bring people to the
Race Park for specific promotional events with a view of turning infrequent
visitors into occasional visitors and more frequent visitors into regular
visitors. Other marketing programs have been developed to appeal to simulcasting
customers and the more serious horseplayers.

      Management utilizes a variety of marketing techniques in support of these
objectives including: (i) maintaining a public relations program to distribute
news, information, features, handicapping tips and results in local and national
broadcast and print media, (ii) maintaining an advertising presence in the
market, primarily through newspaper, television and radio campaigns, (iii)
coordinating promotional efforts in cooperation with sponsors, suppliers and
vendors, (iv) developing a strong group sales program, to appeal to large
corporate, civic and affinity groups, (v) holding specialized promotions and
on-going programs that are designed to attract unique demographic and/or
cultural groups, (vi) providing support for Houston area community events, (vii)
focusing attention on customer service and refinements to the Race Park's
facilities, (viii) holding handicapping seminars and tournaments both to educate
fans and promote the excitement of wagering, and (ix) producing direct mail both
to introduce the track to new groups and communicate with existing customers.

      Racetracks in certain states have begun offering alternative forms of
gaming, such as slot machines and video lottery machines, in order to increase
both revenues and purses, thereby strengthening both the operations and the
racing programs. In 1999, the Race Park invested significant effort and monies
lobbying the Texas legislature to authorize additional forms of gaming at
racetracks in Texas; however these efforts were not successful. Management
intends to continue to invest in efforts to change existing legislation for the
benefit of pari-mutuel license holders in the next legislative session, which
begins in early 2001. There can be no assurance that these efforts will result
in legislative changes.

      Approximately 90 of the Race Park's 300 acres of land remain undeveloped.
Management continues to research and study the economic viability of proposals
for the commercial development of this property. Currently under construction,
within existing facilities, is a state-of-the-art, Las Vegas style race book
where patrons can relax and wager on races simulcast from horse and greyhound
tracks from across the country and overseas. Future development plans could
include the construction and operation of businesses such as restaurants, night
clubs, retail shops, hotels or other types of entertainment facilities.

      On January 24, 2000, SHRP Valley LLC, a limited liability company
wholly-owned by the Partnership, purchased all of the issued and outstanding
capital stock of Ladbroke Racing Texas Corporation ("LADBROKE") for $2.35
million in cash. Ladbroke owned a greyhound racetrack in Harlingen, Texas.
Ladbroke's name was subsequently changed to Valley Race Park Inc. Race Park
management re-opened the facility on March 17, 2000 and plans to conduct year
round horse and greyhound simulcasting and a three to four month season of live
greyhound racing beginning in December 2000.

   COMPETITION

      The Partnership faces competition from a variety of wagering and gaming
sources, including Gulf Greyhound, the Texas State Lottery, numerous charity
operated bingo facilities located in the Houston area and Louisiana casinos
located approximately 125 to 150 miles from Houston.

      Although the Race Park competes with Gulf Greyhound for pari-mutuel
wagering dollars, prior to September 1, 1997, the Race Park had the exclusive
right to simulcast horse racing in the greater Houston metropolitan area. During
1997, the Texas Legislature authorized cross-breed simulcasting between horse
tracks and greyhound tracks at Texas pari-mutuel facilities. This now allows
greyhound tracks to display and accept wagers on races broadcast from horse
tracks and horse tracks to display and accept wagers on races broadcast from
greyhound tracks. Gulf Greyhound began simulcasting horse races as of September
1, 1997 when the legislation became effective. Therefore, the Race Park now
competes with Gulf Greyhound for horse racing customers in the Houston market.
Management believes that although the competition from Gulf Greyhound has
negatively impacted and will continue to negatively impact commissions generated
from wagering on horse racing, these negative impacts have been and will
continue to be more than offset by the additional commissions generated from
wagering on simulcast greyhound racing.

      The Race Park also competes for wagering dollars with the Texas State
Lottery and charity operated bingo facilities. Both the lottery and bingo are
relatively easy games to learn versus the more complex nature of handicapping
and wagering on horse racing, which places the Race Park at a competitive
disadvantage to these forms of wagering. The Race Park attempts to mitigate
these factors by providing various fan education programs for customers.

      The Race Park also competes for wagering dollars with casinos located in
the state of Louisiana. Publicly available information indicates that the
majority of the customers at riverboat casinos located in Lake Charles,
Louisiana come from Houston. Management believes that the location of the Race
Park, within a one hour drive of the majority of the population of Houston, is a
competitive advantage for the Race Park over the casinos, which are located two
hours away for most Houston residents. However, as with the Lottery and bingo,
many casino gaming opportunities are easier to learn than horse racing.

      The Race Park also competes for customers with other forms of
entertainment, including the Houston Livestock Show and Rodeo, held annually in
February and March, and a wide range of live and televised professional,
collegiate and high school sporting events that are available in the Houston
area. The Race Park could, in the future, also compete with other forms of
gambling in Texas, including casino gambling or other forms of gaming on Indian
reservations.

      Races broadcast from the Race Park compete for wagering dollars and
commissions with races simulcast from other racetracks throughout the United
States and around the world. The ability of the Race Park to compete with other
racetracks for these wagering dollars is dependent on several factors, including
the quality and quantity of horses and the timing of live meets. The quality and
quantity of the Race Park's horses is dependent on the Race Park's ability to
pay purses at a high enough level to attract the highest quality of horses in a
sufficient quantity to fill the races conducted by the Race Park. Races
broadcast from the Race Park compete with races broadcast from other racetracks
where the quality of horses is often higher than the quality of horses racing at
the Race Park. However, management believes that the increase in simulcasting
activity, which has resulted in increased purses paid, has been improving the
quality of the racing program conducted at the Race Park over the past three
years. The mild winter conditions in the Houston area also assists the Race Park
in attracting horses as it ensures uninterrupted training and racing for
horsemen compared to racetracks in the Midwest and East Coast regions, which may
be closed temporarily due to inclement weather. By conducting thoroughbred
racing during the winter season, the Race Park also faces less competition for
simulcast wagering dollars at locations across the country as fewer racetracks
conduct live racing during this time of year. Thus, during the winter season,
the Race Park has a competitive advantage in attracting higher quality horses
which increases the ability of the Race Park to expand the simulcast handle
wagered on its thoroughbred races.

      The Race Park has annually conducted a summer quarter horse meet. Although
quarter horse racing does not command the same level of wagering across the
United States as thoroughbred racing, the Race Park has been able to export its
quarter horse racing signal to approximately 98 racetracks and off-track
facilities around the country. This is primarily due to the fact that the level
of quarter horse purses paid puts the Race Park among the top five quarter horse
racetracks in the United States. This level of purse payments enables the Race
Park to attract high quality quarter horses.

      The Race Park conducts its live racing for all thoroughbred and quarter
horse races in the evenings. As the majority of racetracks in the United States
conduct racing during the day, management believes that night racing
significantly increases the ability of the Race Park to export its racing signal
to simulcasting facilities at racetracks and off-track locations. Also, the
nighttime performances have historically drawn higher attendance at the Race
Park than daytime performances.

      Another competitive factor faced by the Race Park includes the allocation
of a sufficient number of live race days by the Racing Commission. While the
Class 1 racetracks in Texas are each entitled to approximately 17 weeks of live
racing per breed (thoroughbred and quarter horse), many factors are considered
in the actual granting of race days. Input is solicited by the Racing Commission
from the racetracks, racehorse owners and trainers, and horse breeding
organizations. Management works closely with all of the individuals and groups
involved in order to try to obtain a schedule that contains an optimal number of
live race days and that is in the best economic interest of the Race Park.

   SEASONALITY OF RACING

      Handle and commissions from live racing and host simulcasting are affected
by the breed of horse running at the Race Park. Generally, commissions generated
from thoroughbred racing are higher than commissions generated from quarter
horse racing. Approximately 80% of the Race Park's net pari-mutuel commissions
from live racing and host simulcasting are derived from thoroughbred racing.
Increased commissions from thoroughbred racing are primarily due to two factors,
the overall popularity of thoroughbred races and the timing of the Race Park's
thoroughbred meets. Also, as discussed above, the Race Park conducts a winter
thoroughbred meet during which the Race Park is able to broadcast its racing
signal to a large number of facilities. Races broadcast during the summer
quarter horse meet must compete with much stronger thoroughbred signals from
around the country.

      Guest simulcast wagering at the Race Park is also affected by the
seasonality of racing throughout the United States. The Triple Crown races in
May and June and the Breeders' Cup program in the fall, in addition to the high
quality racing programs held at United States racetracks throughout the spring,
summer and early fall, help to increase guest wagering and attendance during
those time periods. As a result, the Partnership's net pari-mutuel commissions
from guest simulcast wagering on horse racing have been highest in the second
quarter of the year.

      Thoroughbred and Quarter horse racing are conducted in all types of
weather; however, racing may be canceled due to extreme local weather
conditions. Although the Race Park has rarely been forced to cancel live racing,
inclement weather does negatively effect the level of attendance at the Race
Park.

   EMPLOYEES

      As of March 1, 2000, the Race Park had approximately 120 year-round
full-time employees, approximately 70 year-round part-time employees and, due to
the seasonal nature of the business, up to approximately 500 seasonal employees.
The number of seasonal employees utilized depends principally on whether or not
the Race Park is conducting live racing and varies based upon attendance levels.

      Certain individuals employed by MAXXAM and its wholly owned subsidiaries
provide management, legal, financial, corporate development and other services
to the Partnership from time to time. These affiliates are reimbursed for their
estimated actual costs incurred in providing these services to the Partnership.
The Race Park continuously monitors its staffing levels and its use of services
provided by MAXXAM employees.

   REGULATION AND TAXATION

      Texas Racing Act
      Under the Racing Act, horse racetracks are classified as Class 1, Class 2,
Class 3 or Class 4 racetracks. A Class 1 racetrack must operate in a county with
a population of at least 750,000. Only three Class 1 racetracks may be licensed
in the state of Texas. The Racing Commission does not limit the number of Class
2 racetracks that may be licensed and operated in Texas or where those
racetracks may be located. A Class 2 racetrack is entitled to conduct 60 days of
live racing in a calendar year. Class 3 and Class 4 racetracks are generally
operated by county fairs for short periods of time.

      Ownership and operation of horse racetracks in Texas are subject to
significant regulation as set forth in the Racing Act and as administered by the
Racing Commission. The Racing Act provides, among other things, for the
allocation of each wagering pool among betting participants, the state of Texas,
purses, special equine programs and racetracks. The Racing Act also empowers the
Racing Commission to license and regulate substantially all aspects of horse
racing in the state. The Racing Commission, among other things, licenses all
employees and workers at a racetrack (including jockeys, trainers and
veterinarians); regulates the transfer of ownership interests; allocates live
race days; approves race programs; regulates the conduct of races; oversees the
administration of drugs to horses; sets specifications for the racing surfaces,
animal facilities, employee quarters and public areas of racetracks; regulates
the types of wagers on horse races and approves all material contracts with
racetracks, including management agreements, simulcast agreements, totalisator
contracts and concessionaire agreements. The ability of the Race Park to conduct
live racing and pari-mutuel wagering is dependent on continued governmental
approval of these activities as legalized forms of gaming.

      Restrictions on Ownership
      The Racing Act requires that a majority of the ownership interests of a
license holder be held at all times by persons who are United States citizens
and who have been continuous residents of the state of Texas for the preceding
ten years. Additionally, it is illegal under the Racing Act for any person to
own a 5% or greater interest in more than two racetrack licenses in the state of
Texas (both horse tracks and greyhound tracks are grouped together for this
purpose). The Race Park's license (the "LICENSE") is not transferable but is
subject to a negative pledge (as security for the Partnership's Extendible
Notes). In the event of a foreclosure by the Trustee for the Extendible Notes
(the "TRUSTEE") or the holders of Extendible Notes (the "NOTEHOLDERS") following
an event of default, a number of restrictions and procedural requirements apply
to any proposed or subsequent transfer or use of the License. The Racing Act
generally requires pre-approval by the Racing Commission of all transfers or
issuances of "pecuniary interests" in the holder of a racetrack license.
Interests in the Partnership constitute "pecuniary interests" and generally any
transfer of an interest in the Partnership would require the prior approval of
the Racing Commission.

      Regulations on Simulcasting
      The Race Park is authorized to conduct guest and host simulcasting under
the Racing Act and the Federal Interstate Horseracing Act of 1978. In Texas,
simulcast broadcasts may only be sent to licensed racetracks, as the Racing Act
does not provide for off-track wagering. All simulcast contracts must be
approved by the Racing Commission. In accordance with the Rules of Racing, all
guest and host simulcasting contracts must also be approved by the horsemen.
Generally, such approval would only be withheld for matters considered to be
detrimental to the integrity or best interests of racing. However, since the
Race Park is unable to conduct simulcast wagering without the approval of the
Racing Commission and the horsemen, the revocation or non-renewal of the
approval of either the Racing Commission or the horsemen could have a material
adverse effect on the Race Park's consolidated financial position, results of
operations or liquidity.

      Class 1 and Class 2 horse tracks must take signals from Texas Class 1
horse tracks when such signals are made available to them, in preference to
signals from other tracks. Class 1 racetracks are not required to take simulcast
signals from Class 2 racetracks. Under the Racing Act, a Texas horse track that
offers wagering on greyhounds must take all signals available from Texas
greyhound tracks in preference to out-of-state greyhound signals. Likewise, a
Texas greyhound track that offers wagering on horses, must take all signals made
available from Texas horse tracks in preference to out-of-state horse signals.

      Taxation
      The Partnership is subject to significant taxes and fees from state and
local agencies. These taxes and fees may be increased at any time as the
prospect of significant additional revenue is one of the primary reasons that
taxing jurisdictions allow legalized gaming. From time to time, various taxing
jurisdictions, including the Texas Legislature, have proposed and enacted
changes in the laws and the administration of such laws affecting the taxes and
fees paid by the Race Park. Prior to September 1, 1997, the Partnership was
required to set aside 0.25% of each simulcast wagering pool for the Texas
Commission on Alcohol and Drug Abuse. Under amendments to the Racing Act enacted
during 1997, this 0.25% was designated to repay the state of Texas for funds
previously appropriated to administer and enforce the Racing Act. This tax was
eliminated during 1999 when all amounts due to the State of Texas, including
interest, were repaid. Also, in accordance with amendments to the Racing Act
enacted during 1997, the pari-mutuel wagering tax on guest simulcast wagering on
horse racing was increased from 1% to 1.25% and the tax on guest wagering on
greyhound racing was reduced from 1.5% to 1.25%. As of January 1, 1999, the
allocation to the state of Texas was reduced by 0.25% to 1%. Also, as of January
1, 1999, the 1% pari-mutuel wagering tax due to the state of Texas from live
racing was eliminated on the first $100 million wagered. There can be no
assurance that further changes to the taxes and fees assessed on the Race Park
will not be made or that such charges will not have a material adverse effect on
the Race Park's consolidated financial position, results of operations or
liquidity.

      Other Regulations
      The Race Park is required to file certain reports with the Internal
Revenue Service regarding certain cash transactions and certain wagering
winnings by patrons. The Race Park is also subject to a variety of environmental
and other laws and regulations, including laws and regulations dealing with
animal waste management and wetlands. The Race Park is subject to other federal,
state and local regulations and, on a periodic basis, must obtain various
licenses and permits. The Race Park also has an agreement with a company related
to the sale of alcoholic beverages. The Race Park derives significant revenues
from the sale of alcoholic beverages. The interruption or failure of this
company to maintain valid permits and licenses to sell alcoholic beverages could
have a material adverse effect on the Race Park's consolidated financial
position, results of operations or liquidity.

ITEM 2.         PROPERTIES

      The Race Park is located on approximately 300 acres of land (the "SITE")
owned by the Partnership. The Site is located in Harris County approximately 18
miles from downtown Houston and approximately 15 miles from Bush
Intercontinental Airport. The Site currently includes approximately 90 acres of
undeveloped land. The Race Park fronts Sam Houston Parkway, a major tollway,
providing ready access to residents of the greater Houston metropolitan area.

      The Race Park's buildings and grounds have an aggregate capacity of
approximately 18,000 patrons and 10,000 cars. The Grandstand building at the
Race Park is an air-conditioned, fully-enclosed structure of approximately
196,700 square-feet with a variety of viewing and simulcasting facilities on
three levels. The Grandstand has seating for 6,000 patrons and is designed to
accommodate approximately 10,000 total patrons. There are numerous television
monitors, an electronic message board, video walls, video replay libraries and
odds information boards throughout the Grandstand to increase the flow of
information to bettors. Simulcast races are shown on designated television
monitors. Each Grandstand level has numerous pari-mutuel betting windows,
automated betting machines and concession areas. Currently under construction in
an area at the north end of the Grandstand is a state-of-the-art, Las
Vegas-style race book which, when completed, will feature a bar and lounge,
concessions, a video wall and individual simulcasting carrels for private
simulcast wagering. To be called "The Players' Lounge," the race book is
scheduled to be completed in late March 2000 at a cost of approximately $1
million.

      In addition to the Grandstand, there are three additional areas from which
patrons can watch the races: the standee ramp or apron between the Grandstand
and the racing ovals; the 30,000 square foot enclosed, air-conditioned simulcast
pavilion which is located immediately north of the Grandstand; and the infield
area of the racetrack. The simulcast pavilion is typically the only portion of
the Race Park that is open to the public on days that only simulcasting is being
conducted. The simulcast pavilion was renovated during 1998. These other areas
have concession stands and pari-mutuel facilities nearby. A tunnel provides
access to the infield.

      The Race Park has two racing ovals - a one and one-quarter mile dirt track
and a one and one-eighth mile turf course. Each racing oval features
straightaways or "chutes" to accommodate varying race lengths. The surface of
the tracks and the rails have been designed to lessen the risk of injuries to
horses and jockeys and are generally considered to be of high quality. The
backside contains 16 barns capable of housing a total of approximately 1,200
horses. Each barn contains stalls for onsite stabling, tack rooms, hay and feed
storage areas, grooms' quarters, wash racks and four outdoor walkers. The Race
Park also has a stakes barn for visiting horses, a receiving barn, a holding
barn and an isolation facility. An equine veterinary facility is also located at
the Race Park.

      In January 2000, the Race Park acquired Valley Race Park ("VALLEY"), a
greyhound racetrack located in Harlingen, Texas. Valley is situated on
approximately 80 acres of land. Valley has a 1/4 mile oval greyhound racing
track, approximately 91,000 square feet of buildings and a seating capacity of
approximately 2,000. There are approximately 15 acres of paved parking with a
2,500 car capacity and eighteen kennels on the property which can house 1,080
greyhounds. Valley originally opened in 1990, but has been closed since
September 1995. Race Park management re-opened the facility for year
round horse and greyhound simulcasting on March 17, 2000 and plans to conduct a
three to four month season of live greyhound racing beginning in December 2000.

      Under the indenture governing the Partnership's Extendible Notes (the
"INDENTURE"), substantially all of the Partnership's assets, including the
Partnership's properties, are pledged as collateral on the Extendible Notes. The
racing license held by the Partnership is also subject to a negative pledge for
the benefit of the holders of the Extendible Notes.

ITEM 3.         LEGAL PROCEEDINGS

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. See Item 1. "Business--General" for cautionary information with respect
to such forward-looking statements.

      1995 Plan of Reorganization
      On April 17, 1995, SHRP, Ltd. and two affiliates (the "DEBTORS") filed
voluntary petitions to reorganize under the provisions of Chapter 11 of the
United States Bankruptcy Code. On September 22, 1995, the Bankruptcy Court
entered an order confirming the Debtors' plan of reorganization (the "PLAN").
All transactions called for by the Plan were completed on October 6, 1995 (the
"EFFECTIVE DATE") and the case was closed on December 19, 1996. The Plan called
for, among other things, a reduction in the Partnership's long-term debt, a
significant cash infusion, contribution of additional property and a
reorganization of the Partnership.

      Under the terms of the Plan, the Extendible Notes were issued in exchange
for the Partnership's 11 3/4% Senior Secured Notes (the "ORIGINAL NOTES"). The
Extendible Notes had an initial aggregate principal amount of $37.5 million,
mature on September 1, 2001 and bear interest at the rate of 11% per annum. The
maturity date of the Extendible Notes may be extended to September 1, 2003 (with
an increase in the rate of interest to 13% per annum) if the Texas legislature
passes significant gaming legislation (as defined) between January 1, 2001 and
August 15, 2001. Interest on the Extendible Notes accrues in-kind and is not
payable in cash until a certain level of cash flow from operations has been
achieved. Once cash interest payments commence, interest payments may not
thereafter be paid in-kind. The Indenture limits the Partnership's ability to
incur additional indebtedness and liens, to engage in transactions with
affiliates, to make investments and to make distributions, although the
Indenture does allow the Partnership to become involved in certain gaming,
entertainment and other ventures.

      On the Effective Date, a new investor group (the "NEW INVESTOR GROUP")
made a capital contribution of cash in the aggregate amount of $5.9 million.
Additionally, a wholly owned subsidiary of MAXXAM contributed an approximately
87 acre tract of adjoining land having a fair market value of $2.3 million. Each
member of the New Investor Group also provided its pro rata share of a $1.7
million line of credit. This line of credit would be used to fund future cash
flow requirements should the cash infusion be insufficient.

      The Plan provided for the elimination of all existing partnership
interests. The Partnership has issued 33.3% of the equity in the Partnership to
certain holders of allowed unsecured bankruptcy claims (the "CREDITOR EQUITY"),
a majority of which relates to the unsecured deficiency claims attributable to
the Original Notes. The Creditor Equity is held in the form of common stock in
the Additional General Partner. On the Effective Date, the New Investor Group
received 66.7% of the equity in the Partnership. The Managing General Partner
was issued a 1% interest in the Partnership in exchange for contributing its pro
rata share of the investment made by the New Investor Group. See Note 3 to the
Partnership's Consolidated Financial Statements appearing in Item 8 for further
information concerning the bankruptcy proceedings.

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

ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      Not applicable.

                                     PART II

ITEM 5.         STOCKHOLDER MATTERS

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. See Item 1. "Business--General" for cautionary information with respect
to such forward-looking statements.

      There is no established public trading market for the Partnership's
ownership interests. The Partnership has eight limited partners in addition to
the two general partners. The Partnership interests are not transferable without
the consent of the Managing General Partner. Under the Indenture, distributions
are restricted except for amounts necessary to pay taxes on income of the
Partnership allocated to a partner. The Partnership has not made distributions
to its partners since the commencement of operations and it is doubtful that the
Partnership will be able to make any distributions to its partners for at least
the foreseeable future. See Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Item 8. "Financial Statements
and Supplementary Data."

ITEM 6.         SELECTED FINANCIAL DATA

      The selected financial data of the Partnership for each of the years in
the five-year period ended December 31, 1999 presented below, should be read in
conjunction with Item 7. " Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with the Partnership's Consolidated
Financial Statements and Notes thereto appearing in Item 8.


<TABLE>
<CAPTION>

                                                                    YEARS ENDED DECEMBER 31,
                                              -------------------------------------------------------------------
                                                  1999          1998          1997          1996          1995
                                              ------------  ------------  ------------  ------------  -----------
                                                        (IN THOUSANDS OF DOLLARS, EXCEPT FOR ATTENDANCE)
<S>                                           <C>           <C>           <C>           <C>           <C>
Summary of Operations:
   Revenues.................................  $    27,331   $    24,195   $    20,027   $    20,752   $    19,679
   Costs and expenses (1) (2)...............      (24,478)      (23,345)      (22,250)      (23,342)      (24,144)
   Income (loss) before depreciation and
   amortization (2).........................        3,969         1,826        (1,295)       (1,704)       (2,193)
   Income (loss) before reorganization
      items.................................        2,853           850        (2,223)       (2,590)       (4,465)
   Reorganization items (3).................            -             -             -           (83)      (48,915)
   Income (loss) from operations (3)........        2,853           850        (2,223)       (2,673)      (53,380)
   Extraordinary item (4)(5)................         (215)            -             -             -        63,780
   Net income (loss)........................       (6,799)       (6,858)       (8,406)       (7,622)        5,608

Balance Sheet Data (at end of period):
   Current assets...........................  $    12,837   $     9,957   $     9,030   $     7,797   $     8,384
   Total assets (3).........................       37,855        35,489        34,534        33,937        34,956
   Current liabilities......................        7,155         7,505         8,345         6,456         5,645
   Notes payable (including notes to
      affiliates), less current portion (4)(5)     49,548        41,081        33,393        27,162        22,171
   Partner's equity (deficit)...............      (22,722)      (15,923)       (9,065)         (659)        6,963

Distributions paid to partners..............  $         -   $         -   $         -   $         -   $         -

Other Data:
   Total attendance.........................      718,037       665,576       608,120       684,122       665,981

   Live handle..............................  $    25,056   $    22,352   $    20,175   $    25,620   $    27,983
   Guest handle.............................      120,433       112,139        93,543        88,579        82,381
   Host handle..............................      208,987       162,965       128,252       109,648        51,451
   Net pari-mutuel commissions..............       18,097        16,180        13,276        12,917        10,566


<FN>
(1)  Includes depreciation expense of $1,116, $976, $928, $886, and $2,272 for
     1999, 1998, 1997, 1996 and 1995, respectively.
(2)  Includes accrued management fees of $750 for 1999, 1998, 1997 and 1996,
     and $183 for 1995, which cannot be paid until two consecutive interest
     payments on the Extendible Notes have been paid in cash.
(3)  Reorganization items recorded to implement the Plan. Adjustment of assets
     to fair value represents the reduction of property and equipment and other
     assets to their estimated recoverable amounts and reorganization expenses
     represent the professional fees and expenses necessary to implement the
     Plan.
(4)  Extraordinary gain on discharge of liabilities recorded in 1995 in
     connection with the Plan represents the gain recognized due to the
     discharge of current liabilities and long-term debt.
(5)  Extraordinary loss on extinguishment of debt in 1999 in connection with
     the purchase and retirement of $1.2 million face value of Extendible Notes
     in December 1999.
</FN>
</TABLE>

ITEM 7.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                RESULTS OF OPERATIONS

      The following should be read in conjunction with the Partnership's
Consolidated Financial Statements and Notes thereto appearing in Item 8.

      This section contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. See Item 1. "Business--General" for cautionary information with respect
to such forward-looking statements.

   INCOME (LOSS) FROM OPERATIONS

           The following table presents selected operational information for the
years ended December 31, 1999, 1998 and 1997:

<TABLE>
<CAPTION>

                                                                                             DECEMBER 31,
                                                                                    -------------------------------
                                                                                      1999       1998       1997
                                                                                    ---------  ---------  ---------
<S>                                                                                 <C>        <C>        <C>
Number of live race days..........................................................        134        129        143
Simulcast only days...............................................................        230        235        221
Average daily attendance - live race days.........................................      3,794      3,610      3,176
Average daily attendance - simulcast only days....................................        912        849        694

Average live per capita wager.....................................................  $      49  $      48  $      44
Average combined live and guest per capita wager - live race days.................        158        161        145
Average guest per capita wager - simulcast only days..............................        310        298        310

                               (Amounts in millions)
Live handle.......................................................................  $    25.1  $    22.4  $    20.2
Guest simulcasting handle - horses................................................       97.1       95.9       93.5
Guest simulcasting handle - greyhounds ...........................................       23.3       16.2         -
Host simulcasting handle..........................................................      208.9      163.0      128.3

Net pari-mutuel commissions:
   Live...........................................................................  $     3.3  $     2.7       $2.4
   Guest - horses.................................................................        8.1        8.3        8.3
   Guest - greyhounds.............................................................        2.7        2.0          -
   Host...........................................................................        4.0        3.2        2.6
                                                                                    ---------  ---------  ---------
Total net pari-mutuel commissions.................................................  $    18.1  $    16.2  $    13.3
                                                                                    =========  =========  =========

</TABLE>

      Revenues. The Partnership's principal source of revenues is net
pari-mutuel commissions earned on live thoroughbred and quarter horse racing and
on simulcast racing as both a guest and host track. During periods between live
racing dates, the Partnership's principal source of revenues is from wagering by
Race Park patrons on simulcasts of horse and greyhound racing being conducted at
other tracks. Other sources of revenue are food and beverage sales, admission
and parking fees, corporate sponsorships and advertising, club memberships,
suite rentals and other miscellaneous items.

      Total revenues for the years ended December 31, 1999, 1998, and 1997 were
$27.3, $24.2, and $20.0 million, respectively. Handle and commissions generated
from both guest and host simulcasting and live racing have continued to increase
over the three year period. The increase in handle and commissions from live
racing during 1999 as compared to 1998 levels was primarily due to the
elimination of the 1% tax on live handle that was being paid to the state of
Texas in 1998, the addition of five live race days in 1999 over 1998, and a 5%
increase in average daily attendance on live race days. In 1999, the
Partnership's share of net pari-mutuel commissions from live racing increased by
1%, or approximately $250,000, due to the elimination of the wagering tax on the
first $100 million wagered on live racing. The 5% increase in average daily
attendance on live race days can be attributed to a more aggressive marketing
campaign in 1999 versus 1998. The increase in handle and commissions from live
racing during 1998 as compared to 1997 levels was primarily due to higher
average daily attendance and an increase in the live per capita wager. The
increase in average daily attendance was partially due to the deletion of
Wednesday racing during the spring thoroughbred meet, which generates lower
average daily attendance than weekend race days.

      The Race Park began offering guest simulcast wagering on greyhound races
during March 1998 under cross-breed simulcasting provisions contained in the
1997 Amendments. Overall, guest simulcasting handle increased by 7.4% during
1999 as compared to 1998. Most of the increase is due to simulcasting on
greyhound races, which increased by 44% from 1998 to 1999 due to having a full
year of greyhound simulcasting in 1999. Guest simulcasting horse handle
increased by 1.3% during 1999 as compared to 1998; however, net pari-mutuel
commissions from guest horse simulcasting decreased by 2.4% for the same time
period. This decrease in the ratio of net pari-mutuel commissions to handle is
due to incremental, annual increases in the allocation to purses in accordance
with the THP Agreements and the 1997 Amendments which became effective in 1997
and extended through 1999. Crossbreed simulcasting, whereby horse tracks are
allowed to carry and wager on simulcast signals of greyhound races and greyhound
tracks are allowed to carry and wager on simulcast signals of horse races, is
the primary factor for the increase in guest simulcasting commissions during
1999 and 1998. From 1997 to 1998, net pari-mutuel commissions from guest
simulcasting increased by 24% due to the introduction of crossbreed simulcasting
which began with one signal in March 1998 and grew to several signals beginning
in July 1998 and continuing thereafter. The 2.6% increase in guest horse handle
from 1997 to 1998 was substantially offset by the increased pari-mutuel wagering
tax and by increases in the allocation of takeout to purses.

      Net pari-mutuel commissions from host simulcasting increased by 25% from
1998 to 1999 due to increases in wagering at the majority of the racetracks and
off-track wagering facilities receiving the Race Park's simulcast signal. Net
pari-mutuel commissions from host simulcasting increased by 23% from 1997 to
1998 primarily due to an increase in the number of racetracks and off-track
facilities receiving the Partnership's simulcast signal and a beneficial change
in the commission allocation to purses from host wagering. Management expects
average daily host handle to continue to increase during 2000; however,
commissions from host simulcasting as a percentage of handle will decrease, as
they did in 1999, due to an increase in the allocation to purses discussed in
Item 1 under "Purses and Horsemen's Agreements."

      Revenues generated from food and beverage sales during the year ended
December 31, 1999 increased from 1998 levels by 12% primarily due to the
addition of five live race days and the increase in average daily attendance on
both live and simulcast only race days. Revenues generated from admission and
parking fees, program sales and other miscellaneous sources have also increased
during 1999 compared to 1998 primarily due to the addition of five live race
days and the increased average daily attendance. During 1998 these revenues
increased compared to 1997 primarily due to increased average daily attendance.

      Income (Loss) From Operations. For the year ended December 31, 1999, the
Partnership reported income from operations of $2,853,000 which is $2 million
higher than the same period in 1998. This improvement is the result of the
substantial increase in revenues discussed above as well as the Partnership's
continued efforts to reduce and control operating costs and expenses. In
particular, the cost of pari-mutuel operations and other operating costs, as
well as utilities expense and state and local taxes, all remained virtually
unchanged or decreased for the year ended December 31, 1999 versus 1998.
Overall, revenues increased approximately 13% during 1999 compared to 1998 while
costs and expenses increased by only 5%.

      The improvement in 1998 operating income from 1997 operating loss is due
to the continued decrease in operating costs and expenses, especially salaries
and wages, management and other professional fees and marketing and advertising.
Salaries and wages remained virtually unchanged in 1998 over 1997 primarily due
to a reduction in staffing in several operating departments and positions that
went unfilled during the year. Management and other professional fees decreased
in 1998 versus 1997 due to the Texas state legislature not being in session
during 1998. Marketing and advertising remained virtually unchanged in 1998 over
1997 as the advertising program maintained approximately the same level as in
1997. These decreases were offset by an increase in costs of operations, which
increased in proportion to revenues.

      Other Income (Expense). Other income (expense) reflects interest earned
net of interest expense, including amortization of the original issue and the
re-issue discounts on the Original Notes and the Extendible Notes. Interest
expense has continued to increase over the three year period due to the
increasing balance of the Extendible Notes related to the payment in-kind of
accrued interest and the amortization of the discount on the Extendible Notes.
Interest expense has also increased as a result of the increasing balance of
management fees payable to MAXXAM for which payment is deferred until two
consecutive payments have been made on the Extendible Notes.

      Extraordinary item. The extraordinary item represents the loss on the
retirement of $1,160,000 face value of Extendible Notes in December 1999.

      Net Loss. Net loss reflects the loss after other income (expense) and
extraordinary items. Other income (expense) and extraordinary items are
described above.

   LIQUIDITY AND CAPITAL RESOURCES

      The net cash provided by operating activities during 1999 of $4.7 million
was $2.7 million more than in 1998 and $4.2 million more than in 1997. Cash
provided by operating activities improved during 1999 compared to 1998 and 1997
primarily due to the increase in income from operations discussed above.

      Restricted cash consists of deposits held for the benefit of horsemen and
funds held for the payment of property taxes. The decrease in restricted cash
from December 31, 1998 to December 31, 1999 is due to a decrease in the funds
held for the payment of property taxes from 1998 to 1999.

      The Partnership had cash and cash equivalents of $6.7 million and a $1.7
million line of credit at December 31, 1999 available to fund the operating
activities of the Partnership. Also, the Partnership is able to defer cash
interest payments on the Extendible Notes until certain conditions are met and
to defer the payment of management fees until two consecutive interest payments
on the Extendible Notes have been paid in cash. The deferral of these items has
significantly improved the liquidity of the Partnership.

      The Partnership is continuing its marketing efforts to increase attendance
and pari-mutuel handle at the Race Park in order to generate operating income.
Also, management intends to continue to initiate legislative efforts to legalize
additional forms of gaming at the Race Park in order to increase revenues.
Further, management is analyzing various proposals to develop new forms of
businesses at the Race Park in an effort to raise new sources of income and to
draw additional attendance to the Race Park. To that end, management has
committed a substantial amount of its cash primarily to two new ventures during
2000, both of which were discussed in Item 1 above. Approximately $3 million, of
which $2.35 million was invested in January 2000, will be invested in the
purchase and start-up operations of Valley Race Park, a greyhound track in
Harlingen, Texas which the Race Park acquired in January 2000. In addition, the
Race Park is in the process of spending approximately $1 million on the
construction of a state-of-the-art, Las Vegas-style race book in its existing
facilities. Management believes that both of these investments will generate
additional income for the Race Park, nonetheless, there can be no assurance that
any of these efforts will be successful.

      The Extendible Notes, together with accrued interest, must be retired in
September 2001, unless the applicable extension provisions apply. To the extent
the Partnership is unable to repay or refinance the Extendible Notes,
alternative sources of funding will be necessary. Although 99.0% of the
Extendible Notes are owned by MAXXAM, there can be no assurance that the
Partnership will be able to repay or refinance the Extendible Notes or that
alternative sources of funding will be available to the Partnership, if needed.

   YEAR 2000

      The Partnership has successfully made the transition to the year 2000 with
no interruptions of business activity from any of its data processing systems or
its embedded technology. The Partnership had implemented programs to assess the
impact of the year 2000 date change on its software and related technologies.
Testing and modifications of the Partnership's critical information systems were
completed prior to December 31, 1999. In some cases, it was cost effective to
purchase and implement new systems. The total cost of remediation to the
Partnership was less than $100,000. System modification costs were expensed as
incurred. Costs associated with new systems were capitalized and are being
amortized over the estimated useful lives of the systems.

ITEM 7A.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      All of the Partnership's debt obligations at December 31, 1999 were fixed
rate obligations. Management, therefore, does not believe that the Partnership
has any material market risk from its debt obligations.

ITEM 8.         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Partners of Sam Houston
   Race Park, Ltd.

      We have audited the accompanying consolidated balance sheets of Sam
Houston Race Park, Ltd. (a Texas limited partnership referred to herein as the
"PARTNERSHIP") as of December 31, 1999 and 1998 and the related consolidated
statements of operations, partners' deficit and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall 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 the
Partnership as of December 31, 1999 and 1998, and the results of its operations
and cash flows for each of the three years in the period ended December 31, 1999
in conformity with generally accepted accounting principles.



                                       BDO SEIDMAN, LLP


March 3, 2000, except for Note 11 for which the date is March 22, 2000
Houston, Texas


                           CONSOLIDATED BALANCE SHEETS
                            (In thousands of dollars)

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                        --------------------------
                                                                                            1999          1998
                                                                                        ------------  ------------
                                        ASSETS
<S>                                                                                     <C>           <C>
Current assets:
   Cash and cash equivalents..........................................................  $     6,690   $      3,764
   Restricted cash ...................................................................        3,533          3,608
   Accounts receivable, net of allowance for doubtful accounts of
      $86 and $51, respectively.......................................................        2,102          2,126
   Prepaid expenses and other current assets..........................................          512            459
                                                                                        -----------   ------------
      Total current assets............................................................       12,837          9,957
                                                                                        -----------   ------------

Property and equipment, net of accumulated depreciation of $4,108 and $2,996,
      respectively....................................................................       25,018         25,532
                                                                                        -----------   ------------
                                                                                        $    37,855   $     35,489
                                                                                        ===========   ============

                           LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
   Accounts payable...................................................................  $     2,236   $      2,232
   Property taxes payable.............................................................          999          1,040
   Other liabilities..................................................................        1,641          1,938
   Amounts due to horsemen............................................................        2,279          2,295
                                                                                        -----------   ------------
      Total current liabilities.......................................................        7,155          7,505
                                                                                        -----------   ------------

Long term liabilities:
   Notes payable......................................................................       49,548         41,081
   Deferred management fees...........................................................        3,874          2,826
                                                                                        ------------  ------------

      Total liabilities...............................................................       60,577         51,412
                                                                                        ------------  ------------

Commitments and contingencies (Notes 1 and 10)

Partners' deficit.....................................................................      (22,722)       (15,923)
                                                                                        ------------  -------------
                                                                                        $    37,855   $     35,489
                                                                                        ===========   ============


<FN>

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

</FN>
</TABLE>

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            (IN THOUSANDS OF DOLLARS)


<TABLE>
<CAPTION>

                                                                                  YEARS ENDED DECEMBER 31,
                                                                          ----------------------------------------
                                                                              1999          1998          1997
                                                                          ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>
Revenues:
   Pari-mutuel commissions, net........................................   $    18,097   $    16,180   $     13,276
   Food and beverage sales.............................................         4,605         4,110          3,366
   Admissions, parking and other.......................................         3,969         3,905          3,385
   Purse Recovery......................................................           660             -              -
                                                                          ------------  -----------   ------------
                                                                               27,331        24,195         20,027
                                                                          ------------  -----------   ------------

Costs and expenses:
   Cost of pari-mutuel operations......................................         1,852         1,846          1,756
   Cost of food and beverage operations................................         2,203         1,971          1,531
   Other operating ....................................................         2,893         3,029          2,433
   Salaries and wages..................................................         8,927         8,349          8,314
   Management and other professional fees..............................         1,755         1,660          2,266
   Marketing and advertising...........................................         2,491         1,968          1,946
   Utilities...........................................................         1,200         1,261          1,143
   State and local taxes...............................................         1,082         1,293          1,113
   Depreciation and amortization.......................................         1,116           976            928
   General and administrative..........................................           959           992            820
                                                                          -----------   -----------   ------------
                                                                               24,478        23,345         22,250
                                                                          -----------   -----------   ------------

Income (loss) from operations .........................................         2,853           850         (2,223)

Other income (expense):
   Interest income.....................................................           339           207            214
   Interest expense....................................................        (9,776)       (7,915)        (6,397)
                                                                          ------------  ------------  -------------
                                                                               (9,437)       (7,708)        (6,183)
                                                                          ------------  ------------  -------------

Loss before extraordinary item.........................................        (6,584)       (6,858)        (8,406)

Extraordinary item-loss on extinguishment of debt......................          (215)            -              -
                                                                          -----------   -----------   ------------

Net loss...............................................................   $    (6,799)  $    (6,858)  $     (8,406)
                                                                          ===========   ===========   ============
<FN>

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

</FN>
</TABLE>


                  CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>

                                                                   MANAGING    ADDITIONAL
                                                                    GENERAL      GENERAL    LIMITED
                                                                    PARTNER      PARTNER    PARTNERS       TOTAL
                                                                  -----------  ---------   ----------   -----------

<S>                                                               <C>          <C>         <C>          <C>
Balance at January 1, 1997......................................  $     (659)  $       -   $        -   $     (659)

   Net loss.....................................................      (8,406)          -            -       (8,406)
                                                                  -----------  ---------   ----------   ----------

Balance at December 31, 1997....................................      (9,065)          -            -       (9,065)

   Net loss.....................................................      (6,858)          -            -       (6,858)
                                                                  -----------  ---------   ----------   -----------

Balance at December 31, 1998....................................     (15,923)          -            -      (15,923)

   Net loss.....................................................      (6,799)          -            -       (6,799)
                                                                  -----------  ---------   ----------   -----------

Balance at December 31, 1999....................................  $  (22,722)  $       -   $        -   $  (22,722)
                                                                  ===========  =========   ==========   ===========

<FN>

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

</FN>
</TABLE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>


                                                                                  YEARS ENDED DECEMBER 31,
                                                                          ----------------------------------------
                                                                              1999          1998           1997
                                                                          ------------  ------------    ----------
<S>                                                                       <C>           <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss............................................................   $    (6,799)  $    (6,858)    $   (8,406)
   Adjustments to reconcile net loss to net cash provided by
   operating activities:
      Depreciation and amortization....................................         1,116           976            928
      Amortization of discounts on long-term debt......................         3,423         2,258          1,360
      Increase in accrued interest.....................................         6,037         5,442          4,886
      Provision for losses on accounts receivable......................            35            22              7
      Extraordinary item - loss on extinguishment of debt..............           215             -              -
      (Increase) decrease  in restricted cash..........................            75         1,233         (1,282)
      Increase in accounts receivable..................................           (11)       (1,015)          (109)
      (Increase) decrease in prepaid expenses and other................           (53)         (164)           249
      Increase in accounts payable.....................................             4           128            559
      Increase in due to affiliates....................................         1,048           965            883
      Increase (decrease) in other liabilities.........................          (338)          267            142
      Increase (decrease) in amounts due to horsemen...................           (16)       (1,235)         1,257
                                                                          ------------  ------------    ----------
        Net cash provided by operating activities......................         4,736         2,019            474
                                                                          ------------  -----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to property and equipment.................................          (602)         (971)          (296)
                                                                          ------------  ------------    -----------
        Net cash used in investing activities..........................          (602)         (971)          (296)
                                                                          ------------  ------------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on notes payable...........................................        (1,208)          (12)           (84)
                                                                          ------------  ------------    -----------
        Net cash used in financing activities..........................        (1,208)          (12)           (84)
                                                                          ------------  ------------    -----------

INCREASE IN CASH AND CASH EQUIVALENTS..................................         2,926         1,036             94
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.........................         3,764         2,728          2,634
                                                                          ------------  -----------     ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR...............................   $     6,690   $     3,764     $    2,728
                                                                          ============  ===========     ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Interest paid, net of amounts capitalized...........................   $        12   $        13     $        8

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
   See Notes 3, 6 and 8


<FN>

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

</FN>
</TABLE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            (IN THOUSANDS OF DOLLARS)

1.      BASIS OF PRESENTATION AND ORGANIZATION, USE OF ESTIMATES AND
        FUTURE CASH REQUIREMENTS

   BASIS OF PRESENTATION AND ORGANIZATION

      The accompanying consolidated financial statements include the accounts of
Sam Houston Race Park, Ltd. (the "PARTNERSHIP"), a Texas limited partnership,
and its wholly-owned subsidiary, New SHRP Capital Corp. ("NEW CAPITAL"). The
Partnership was formed on June 17, 1990 to apply to the Texas Racing Commission
(the "RACING COMMISSION") for a license to acquire, construct and operate a
pari-mutuel horse racing facility in Harris County, Texas (the "RACE PARK"), in
accordance with the Texas Racing Act (the "RACING ACT").

      The Partnership was organized under the laws of the state of Texas and
will terminate on December 31, 2090 unless it is earlier dissolved pursuant to
the Texas Revised Limited Partnership Act or any provision of its Third Amended
and Restated Limited Partnership Agreement (the "AMENDED PARTNERSHIP
AGREEMENT"). The managing general partner of the Partnership is SHRP General
Partner, Inc. (the "MANAGING GENERAL PARTNER"), a wholly owned subsidiary of
MAXXAM Inc. ("MAXXAM"). The Partnership is also comprised of an additional
general partner, SHRP Equity, Inc. (the "ADDITIONAL GENERAL PARTNER") and
limited partner interests. As of December 31, 1999, wholly owned subsidiaries of
MAXXAM held, directly or indirectly, an aggregate 98.9% interest in the
Partnership consisting of a 34.1% general partner interest (including a 33.1%
interest by virtue of its ownership of 99.5% of the common stock of the
Additional General Partner) and a 64.8% limited partner interest.

      Certain reclassifications of prior period information were made in order
to conform with the current presentations. All significant intercompany
transactions have been eliminated in consolidation.

   USE OF ESTIMATES

      The preparation of financial statements in accordance with generally
accepted accounting principles requires the use of estimates and assumptions
that affect (i) the reported amounts of assets and liabilities, (ii) disclosure
of contingent assets and liabilities known to exist as of the date the financial
statements are published, and (iii) the reported amount of revenues and expenses
recognized during each period presented. The Partnership reviews all significant
estimates affecting its consolidated financial statements on a recurring basis
and records the effect of any necessary adjustments prior to their publication.
Adjustments made with respect to the use of estimates often relate to improved
information that was not previously available. Uncertainties with respect to
such estimates and assumptions are inherent in the preparation of the
Partnership's consolidated financial statements; accordingly, it is possible
that the subsequent resolution of the liquidity issues, described in "Future
Cash Requirements" below, could differ in material respects from current
estimates. The results of an adverse resolution of such uncertainty could have a
material effect on the reported amounts of the Partnership's consolidated assets
and liabilities.

   FUTURE CASH REQUIREMENTS

      The Partnership generated income from operations of $2,853 in 1999. In
addition, the Partnership had cash and cash equivalents of $6,690 and a $1,700
line of credit at December 31, 1999 available to fund the operating activities
of the Partnership. Also, the Partnership is able to defer cash interest
payments on the Extendible Notes until September 1, 2001 or until certain
conditions are met, and to defer the payment of management fees until two
consecutive interest payments on the Extendible Notes have been paid in cash.
The deferral of these items has significantly improved the liquidity of the
Partnership.

      The Partnership is continuing its marketing efforts to increase attendance
and pari-mutuel handle at the Race Park in order to generate operating income.
Also, management intends to continue to initiate legislative efforts to legalize
additional forms of gaming at the Race Park in order to increase revenues.
Further, management is analyzing various proposals to develop new forms of
businesses at the Race Park in an effort to raise new sources of income and to
draw additional attendance to the Race Park. To that end, management has
committed a substantial amount of its cash primarily to two new ventures during
2000. Approximately $3,000, of which $2,350 was invested in January 2000, will
be invested in the purchase and start-up operations of Valley Race Park, a
greyhound track in Harlingen, Texas which the Race Park acquired in January
2000. In addition, the Race Park is in the process of spending approximately
$1,000 on the construction of a state-of-the-art, Las Vegas-style race book in
its existing facilities. Management believes that both of these investments will
generate additional income for the Race Park, although, there can be no
assurance that any of these efforts will be successful.

      The Extendible Notes, together with accrued interest, must be retired in
September 2001, unless the applicable extension provisions apply. To the extent
the Partnership is unable to repay or refinance the Extendible Notes,
alternative sources of funding will be necessary. Although 99.0% of the
Extendible Notes are owned by MAXXAM, there can be no assurance that the
Partnership will be able to repay or refinance the Extendible Notes or that
alternative sources of funding will be available to the Partnership, if needed.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Restricted Cash
      The Partnership's restricted cash, as shown on the accompanying
consolidated balance sheets at December 31, 1999 and 1998, includes amounts
designated for the payment of the items listed in the following table:

<TABLE>
<CAPTION>

                                                                                               DECEMBER 31,
                                                                                        ---------------------------
                                                                                            1999          1998
                                                                                        ------------  -------------
<S>                                                                                     <C>           <C>
Deposits held for the benefit of horsemen.............................................  $      2,336  $       2,320
Property taxes and other..............................................................         1,197          1,288
                                                                                        ------------  -------------
                                                                                        $      3,533  $       3,608
                                                                                        ============  =============
</TABLE>

      Cash Equivalents and Concentration of Credit Risk
      Cash equivalents consist of highly liquid money market instruments with
original maturities of three months or less. A substantial portion of the
Partnership's cash equivalents ($5,764 at December 31, 1999) was invested in
various short-term investment grade securities. The Partnership also holds other
amounts in banks and other financial institutions wherein some of the balances
exceed federally insured deposit levels. In the event of nonperformance by such
financial institutions, the Partnership's exposure to credit loss is represented
by the amounts deposited plus any unpaid accrued interest thereon minus the
federally insured deposit limitation. The Partnership mitigates its
concentration of credit risk with respect to the funds in such accounts by
maintaining them at high credit quality financial institutions and monitoring
the credit ratings of such institutions.

      Property and Equipment
      Property and equipment were written down to estimated fair value as
reflected in the sixth amended consolidated plan of reorganization ("the PLAN")
as of October 6, 1995 ("the EFFECTIVE DATE"). Additions to property and
equipment subsequent to the Effective Date are stated at cost. Prior to the
Effective Date, property and equipment were stated at cost. Depreciation is
computed principally utilizing the straight-line method at rates based upon the
estimated useful lives of the various classes of assets. In accordance with the
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
the Partnership reviews long-lived assets, which include property and equipment,
for impairment whenever events or changes in circumstances indicate the carrying
amounts of the Partnership's assets may not be fully recoverable. No adjustments
for impairment were recorded in 1999, 1998 or 1997.

      Notes Payable
      Notes payable includes accrued interest on the Extendible Notes which is
allowed to be paid in-kind until a certain level of cash flow from operations
has been achieved.

      Other Liabilities
      Other liabilities include net liabilities for unclaimed winning
pari-mutuel tickets. Unclaimed winning tickets are valid for sixty days after
the end of the year in which they are generated. Once the tickets are no longer
valid, the remaining amounts held to pay unclaimed winning tickets, net of
allowable reimbursements, are transferred to the Texas Racing Commission.

      The Partnership receives advance payments with respect to private suite
and box rentals, Jockey Club memberships and corporate sponsorship agreements.
The payments are recorded as deferred revenue and are recognized as income over
the term of the respective agreements.

      Purses and Awards
      The Racing Act, certain other agreements, and the rules promulgated by the
Racing Commission stipulate percentages of the pari-mutuel handle which must be
used for the payment of purses and awards depending upon the type of wagers
placed. The term "pari-mutuel handle" means the aggregate amounts wagered.
Purses are established nearly one month in advance, based on expected
pari-mutuel handle and published in a condition book which generally covers
fifteen days of live racing. Horsemen then enter their horses in proposed races
based upon the conditions of the race being entered, including the purses being
offered. In certain circumstances, the Partnership may pay purses and awards in
excess of the amounts provided by the pari-mutuel handle. The Partnership may
adjust the amounts to be paid for future races during the course of a given meet
in order to minimize or eliminate any differences between the amounts provided
by the pari-mutuel handle and the actual amounts of purses and awards paid. The
agreement between the Partnership and the Texas Thoroughbred HBPA, Inc. (the
"TTHBPA") also allows the Partnership to recoup various amounts of the previous
purse overpayments from certain future meets. The TTHBPA is a partner of the
Texas Horsemen's Partnership, L.L.P. (the "THP"), the official horsemen's
organization currently recognized by the Racing Commission. The Partnership
expenses all purse overpayments when they occur. Recoveries of these amounts are
recorded as revenue as they are earned and received.

      Income Taxes
      The Partnership has not made any provisions for income taxes in its
Consolidated Statement of Operations as they are the responsibility of its
partners. The carrying value of the Partnership's net assets for financial
statement purposes was less than the carrying value for income tax reporting
purposes by approximately $16,393 at December 31, 1999. The difference primarily
results from (i) the adjustment of long-term assets to estimated fair value for
financial statement purposes but not for income tax purposes and (ii) the
capitalization of costs for income tax purposes that were expensed for financial
reporting purposes, a substantial portion of which relates to costs incurred
during the start-up period and the reorganization pursuant to the Plan described
in Note 3.

      Fair Value of Financial Instruments
      The carrying amounts of the Partnership's cash and cash equivalents
(including restricted and designated cash) and other notes payable approximate
their fair value. The Extendible Notes had a face value of $56,852 and $52,120,
and a carrying amount of $47,782 and $39,436 as of December 31, 1999 and 1998,
respectively. The market value for the Extendible Notes, based on the infrequent
trades that occurred over the last two years, ranges from approximately $39,000
to $57,000.

3.    1995 PLAN OF REORGANIZATION

      Plan of Reorganization
      On April 17, 1995, the Partnership, SHRP Capital Corp. and SHRP
Acquisition, Inc., the Partnership's largest limited partner, filed for
reorganization under Chapter 11 of the United States Bankruptcy Code. On
September 22, 1995, the United States Bankruptcy Court for the Southern District
of Texas, Houston Division entered an order confirming the Plan. The
transactions called for by the Plan were completed on the Effective Date and the
case was closed on December 19, 1996.

      Under the terms of the Plan, the Extendible Notes were issued in exchange
for the Partnership's 11 3/4% Senior Secured Notes (the "ORIGINAL NOTES"). The
Original Notes had an aggregate principal amount of $75,000, would have matured
on July 15, 1999 and bore interest at the rate of 11 3/4% per annum. The
Extendible Notes had an initial aggregate principal amount of $37,500, mature on
September 1, 2001 and bear interest at the rate of 11% per annum. Interest on
the Extendible Notes accrues in-kind and is not payable in cash until a certain
level of cash flow from operations has been achieved. See Note 6 for further
information concerning the terms of the Extendible Notes.

      On the Effective Date, a new investor group (the "NEW INVESTOR GROUP")
made a capital contribution of cash and other consideration described below.
Each member of the New Investor Group also provided its pro rata share of the
$1,700 line of credit. This line of credit would be used to fund future cash
flow requirements should the cash infusion prove to be insufficient. Each member
of the New Investor Group has secured such investor's portion of the line of
credit with cash held in an escrow account (other than MAXXAM's wholly owned
subsidiaries, whose portion of the line of credit is secured by the guaranty of
MAXXAM). Borrowings on the line of credit would bear interest at 11% per annum
and would be subordinate to the Extendible Notes.

4.      PROPERTY AND EQUIPMENT

      The major classes of property and equipment are as follows:

<TABLE>
<CAPTION>

                                                                                               DECEMBER 31,
                                                                           ESTIMATED    --------------------------
                                                                         USEFUL LIVES       1999          1998
                                                                        --------------  ------------  ------------
<S>                                                                     <C>             <C>           <C>
Buildings..............................................................   5 - 30 years  $    15,096   $     15,075
Equipment, furniture and fixtures......................................   3 - 15 years        2,888          2,428
Race track and other land improvements.................................   5 - 30 years        3,120          3,049
Other..................................................................   2 - 3  years           79             33
Land...................................................................                       7,943          7,943
                                                                                        -----------   ------------
                                                                                             29,126         28,528
Less accumulated depreciation and amortization.........................                      (4,108)        (2,996)
                                                                                        -----------   ------------
                                                                                        $    25,018   $     25,532
                                                                                        ============  ============
</TABLE>

      Depreciation expense for the years ended December 31, 1999, 1998 and 1997
was $1,116, $976, and $928, respectively.

5.      RACING OPERATIONS

      The Partnership conducted 134, 129, and 143 days of live racing during
1999, 1998, and 1997, respectively. Under the Racing Act, the Partnership's
commission revenue is a designated portion of the pari-mutuel handle. The Race
Park receives broadcasts of live racing from other racetracks under various
guest simulcasting agreements. The Race Park also provides broadcasts of live
racing conducted at the Race Park to other racetracks under various host
simulcasting agreements. Under these contracts, the Partnership receives
pari-mutuel commissions of varying percentages of simulcast pari-mutuel handles.

      A summary of the pari-mutuel handle, commissions and deductions for the
years ended December 31, 1999, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
                                                                              1999          1998          1997
                                                                          ------------  ------------  ------------
<S>                                                                       <C>           <C>           <C>
Live handle............................................................   $    25,056   $    22,352   $     20,175
Return to public.......................................................       (19,586)      (17,506)       (15,830)
Purses and breeders awards.............................................        (2,035)       (1,801)        (1,608)
State taxes and fees...................................................             -          (224)          (202)
Breakage...............................................................          (160)         (148)          (150)
                                                                          ------------  -----------   ------------
Net commissions from live racing.......................................         3,275         2,673          2,385
                                                                          -----------   -----------   ------------

Guest handle...........................................................       120,433       112,139         93,543
Return to public.......................................................       (94,636)      (88,471)       (74,252)
Purses and breeders awards.............................................        (8,940)       (7,765)        (6,237)
Host fee...............................................................        (4,025)       (3,537)        (2,982)
State taxes and fees...................................................        (1,425)       (1,545)        (1,246)
Breakage...............................................................          (587)         (509)          (526)
                                                                          ------------  -----------   ------------
Net commissions from guest simulcasting................................        10,820        10,312          8,300
                                                                          ------------  -----------   ------------

Host handle............................................................       208,987       162,965        128,252
Receiving track expenses...............................................      (202,960)     (158,308)      (124,096)
Purses and breeders awards.............................................        (2,025)       (1,462)        (1,565)
                                                                          ------------  -----------   ------------
Net commission from host simulcasting..................................         4,002         3,195          2,591
                                                                          ------------  -----------   ------------

Total pari-mutuel commissions, net.....................................   $    18,097   $    16,180   $     13,276
                                                                          ============  ===========   ============

</TABLE>

      Non-statutory Purse Funding
      On January 10, 2000, the Race Park entered into a new agreement with the
TTHBPA. This new agreement, like the one it replaced, provided for the recovery
of purse overpayments of $660 in 1999, and provides for the recovery of $631
during the year ended December 31, 2000. The Partnership records such recoveries
only as they are earned and received.

6.    NOTES PAYABLE

      Notes payable consist of the following:

<TABLE>
<CAPTION>
                                                                                               DECEMBER, 31
                                                                                        --------------------------
                                                                                            1999          1998
                                                                                        -----------   ------------
<S>                                                                                     <C>           <C>
11% Senior Secured Extendible Notes due September 1, 2001 (net of                                           39,436
   unamortized discount of $9,070 and $12,684 as of December 31, 1999 and
   1998, respectively)................................................................  $    47,782   $
Accrued interest to be paid in-kind...................................................        1,561          1,433
                                                                                        -----------   ------------
                                                                                             49,343         40,869
Unsecured promissory notes............................................................          190            197
Payable to Limited Partners...........................................................           23             23
                                                                                        -----------   ------------
      Total...........................................................................       49,556         41,089
Less current portion, included in Other Liabilities...................................           (8)            (8)
                                                                                        -----------   ------------
                                                                                        $    49,548   $     41,081
                                                                                        ===========   ============

</TABLE>

      The Extendible Notes had an initial aggregate principal amount of $37,500,
mature on September 1, 2001, bear interest at the rate of 11% per annum and are
secured by substantially all the assets of the Partnership. The maturity date of
the Extendible Notes may be extended to September 1, 2003 (with an increase in
the rate of interest to 13% per annum) if the Texas legislature passes
significant gaming legislation (as defined) between January 1, 2001 and August
15, 2001. The indenture governing the Extendible Notes (the "INDENTURE") limits
the Partnership's ability to incur indebtedness and liens, to engage in
transactions with affiliates, to make investments and to make distributions,
although the Indenture does allow the Partnership to become involved in certain
gaming, entertainment and other ventures.

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

      Interest on the Extendible Notes accrues in-kind and is not payable in
cash until a certain level of cash flow from operations has been achieved. Once
cash interest payments commence, interest payments may not thereafter be paid
in-kind. The Partnership issued $5,891 and $5,292 of Extendible Notes during the
years ended December 31, 1999 and 1998, respectively, as payment in-kind for
accrued interest. Interest payments are due on the Extendible Notes on April 1
and October 1 of each year until the Extendible Notes mature.

      In December, 1999, the Partnership purchased and retired $1,160 face value
of Extendible Notes together with the related accrued interest. The transaction
resulted in a loss of approximately $215 and is shown on the accompanying
statement of operations as an extraordinary item.

      The Partnership has entered into an unsecured promissory note. The note
bears interest at 6 1/2% per annum and is due and payable in thirty equal annual
installments to the Harris County Toll Road Authority, operator of the Sam
Houston Parkway. This note represents one-half of the costs incurred to
construct the entrance and exit ramps adjacent to the Race Park. Payments of
approximately $8 plus accrued interest are due annually on April 30 through the
year 2024.

      The New Investor Group has provided the Partnership with a $1,700 line of
credit. This line of credit would be used to fund future cash flow requirements
should the Partnership require it. Each member of the New Investor Group, other
than MAXXAM wholly owned subsidiaries, has secured their portion of the line of
credit with cash in the amount of $23, which is held in an escrow account. The
portion of the line of credit provided by wholly owned subsidiaries of MAXXAM is
secured by the guarantee of MAXXAM. Borrowings on the line of credit would bear
interest at 11% per annum and would be subordinate to the Extendible Notes. The
cash collateral for the line of credit is reflected as restricted cash in the
balance sheet.

      The scheduled maturities for the Partnership's notes payable outstanding
at December 31, 1999 are as follows: December 31, 2000 - $8; 2001 - $58,443;
2002 - $8; 2003 - $8; 2004 - $8; thereafter $152. In the event the Partnership
continues to issue additional Extendible Notes as payment in-kind for accrued
interest, the total amount due on the Extendible Notes at maturity in September
2001 will be $69,494.

7.    PARTNERS' DEFICIT

      The Partnership is currently comprised of the Managing General Partner,
the Additional General Partner and eight limited partners.

      The profits and losses of the Partnership are allocated to the partners in
accordance with their percentage interests, after giving effect to certain
special allocations. However, all net losses (other than nonrecourse deductions)
in excess of the positive capital account balance of any limited partner or the
Additional General Partner are to be allocated to the Managing General Partner.
Income is to be specially allocated to restore a partner's deficit capital
account prior to allocating net profits based on the partner's percentage
interest.

      In the event of a capital call by the Partnership to fund operating
losses, holders of the Extendible Notes may contribute Extendible Notes in lieu
of cash in order to maintain their equity position in the Partnership. So long
as the Extendible Notes are outstanding, the Board of Directors of the
Additional General Partner are entitled to designate at least one-third of the
directors of the Managing General Partner (the "AGP DIRECTORS"), subject to the
reasonable approval of the owner of the Managing General Partner. Certain
significant events (e.g. mergers, consolidations, the sale of all or the
substantial portion of the Partnership's assets, reorganizations, incurrence of
debt in excess of $5,000 and voluntary acts of insolvency) require the approval
of a majority of all of the directors, including a majority of the AGP Directors
voting as a separate class.

8.    MANAGEMENT AGREEMENTS

      As of the Effective Date, the Managing General Partner began managing the
Partnership and the Race Park in accordance with the Amended Partnership
Agreement. Annual management fees are the greater of (a) $750 or (b) an
incentive fee equal to .65% of all gross revenues (as defined). Management fees
are deferred until two consecutive semi-annual cash interest payments have been
made to the holders of the Extendible Notes. Unpaid management fees accrue
interest at the rate of 11% per annum. All such management fees are subordinated
to the Extendible Notes. As of December 31, 1999 and 1998, the Partnership has
accrued $3,874 and $2,826 of management fees, including interest of $697 and
$399, respectively, due to the Managing General Partner.

9.    RELATED PARTY TRANSACTIONS

      Management and other professional fees for the years ended December 31,
1999, 1998 and 1997 include $495, $425 and $488 related to costs incurred for
services provided by MAXXAM and certain of its subsidiaries. Included in
accounts payable at December 31, 1999 and 1998, were obligations to MAXXAM for
such costs of $0 and $45, respectively.

      Management and other professional fees for the years ended December 31,
1999, 1998 and 1997 include $22, $32 and $147 of costs incurred by an affiliate
for legal services and to coordinate legislative and other developmental efforts
of the Partnership. Additionally, the Partnership engages affiliates for legal
and other consulting services in the normal course of business. During the years
ended December 31, 1999, 1998 and 1997, the Partnership incurred fees of $62,
$54 and $70, respectively, with respect to these services.

10.   COMMITMENTS AND CONTINGENCIES

      The Partnership has entered into noncancellable service and operating
lease agreements with several vendors to provide services in addition to
agreements for the use of equipment. Certain of these agreements call for
contingent rentals based upon a variety of factors, the most significant of
which are the number of live racing days and specified percentages of amounts
wagered. Future minimum lease and commitment payments under such noncancellable
service and lease agreements, having a remaining term in excess of one year at
December 31, 1999, are as follows: years ending December 31, 2000 - $576; 2001 -
$288; 2002 - $288; 2003 - $190; 2004 - $90; thereafter $2. The Partnership
incurred approximately $484, $462, and $1,384, including contingent fees and
rentals, for the years ended December 31, 1999, 1998 and 1997, respectively, for
such services and operating lease obligations.

      Beginning January 1, 2000, the Partnership became a participant in a
self-insured group health program of MAXXAM. Under the program, there are both
an individual and an aggregate stop-loss limit.

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

11.   SUBSEQUENT EVENT

      On January 6, 2000, the Race Park, through its wholly-owned subsidiary,
SHRP Valley LLC., entered into a stock purchase agreement with Ladbroke Racing
Corporation to purchase 100% of the issued and outstanding capital stock of
Ladbroke Racing Texas Corporation ("LADBROKE") for $2.35 million in cash.
Ladbroke owned a greyhound racetrack located in Harlingen, Texas. Ladbroke's
name was subsequently changed to Valley Race Park Inc. The transaction received
the approval of the Texas Racing Commission on January 19, 2000 and was
completed on January 24, 2000. Race Park management re-opened the facility on
March 17, 2000 and plans to conduct year around horse and dog simulcasting
and a three to four month season of live greyhound racing at the track beginning
in December 2000.


ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE

           None.


                                   PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS

      The following table sets forth certain information, as of March 1, 2000,
with respect to the executive officers of the Partnership and the directors of
the Managing General Partner.

<TABLE>
<CAPTION>

   THE PARTNERSHIP

             NAME                     AGE                                  POSITION
-------------------------------  -------------   ---------------------------------------------------
<S>                              <C>             <C>
James D. Noteware                     47         President (1)
Robert L. Bork                        61         Senior Vice President and General Manager (2)
Ann M. McGovern                       39         Vice President of Operations
Michael J. Vitek                      37         Vice President of Finance
C. Bryan Pettigrew III                31         Vice President of Marketing (4)
James H. Paulin                       56         Vice President

<CAPTION>

   THE MANAGING GENERAL PARTNER

             NAME                     AGE                                  POSITION
-------------------------------  -------------   ---------------------------------------------------
<S>                              <C>             <C>
Charles E. Hurwitz                    59         Chairman of the Board
D. Kent Anderson                      58         Director (3)
J. Kent Friedman                      56         Director
James D. Noteware                     47         Director
Paul N. Schwartz                      53         Director

<FN>
---------------------------
(1)  Mr. Noteware is not an employee of the Partnership, the Race Park or the
     Managing General Partner.
(2)  Principal executive officer of the Partnership
(3)  Until such time as the Extendible Notes are repaid, the Additional General
     Partner is entitled to designate at least one-third of the directors of
     the Managing General Partner (the "AGP DIRECTORS").  D. Kent Anderson
     currently serves as an AGP Director, with one vacancy existing.
(4)  Mr. Pettigrew submitted his resignation effective March 31, 2000.
</FN>
</TABLE>

      James D. Noteware has served as President of the Partnership since August
1994. Mr. Noteware has also served as a Director and President of the Managing
General Partner since October 1995 and April 1996, respectively. Mr. Noteware
previously served as interim General Manager of the Partnership from November
1994 through October 1995. Mr. Noteware has served as a Director and Chief
Executive Officer of MAXXAM Property Company ("MPC"), a wholly owned subsidiary
of MAXXAM, since January 1993 and was elected Chairman of the Board in September
1999. From January 1993 until September 1999, Mr. Noteware also served MPC as
its President. From November 1990 through December 1992, Mr. Noteware was
Chairman, President and Chief Executive Officer of Phoenix Consulting, Inc., a
real estate management and consulting company. Mr. Noteware served as a national
director in the Real Estate Advisory Services Department of Price Waterhouse
from April 1991 through January 1993. Prior to November 1990, Mr. Noteware
served as National Director in the Real Estate Advisory Services Department at
Laventhol & Horwath.

      Robert L. Bork has served as Senior Vice President and General Manager of
the Partnership since October 1995. Mr. Bork previously served four years as
Vice President-General Manager and Chief Operating Officer of Arlington
International Racecourse, Inc. in Arlington Heights, Illinois. Prior to such
time, Mr. Bork served as Vice President-General Manager of Philadelphia Park in
Benslem, Pennsylvania and Garden State Park in Cherry Hill, New Jersey. Mr. Bork
is a director and Secretary of the Thoroughbred Racing Association of America, a
director of the Thoroughbred Racing Protective Bureau, Chairman of the
Thoroughbred Racing Association Technology Committee and a director of the
Cy-Fair Chamber of Commerce.

      Ann M. McGovern has served as Vice President of Operations of the
Partnership since September 1994. Ms. McGovern previously served for 11 years
with the Racing Division of the Edward J. De Bartolo Corporation, most recently
as Director of Operations at Remington Park in Oklahoma City, Oklahoma from
April 1991 to October 1994 and prior to that as the Assistant Director of
Operations since 1988.

      Michael J. Vitek has served as Vice President of Finance of the
Partnership since November 1999. He served as Vice President of Accounting of
the Partnership from November 1994 to November 1999. Mr. Vitek previously served
from April 1994 to November 1994 as Vice President, Finance and Chief Financial
Officer of Hysan Corporation, a chemical manufacturing and distribution company
and a subsidiary of Wedge Group, Inc., a private investment company. Mr. Vitek
previously served as Corporate Controller of Wedge Group, Inc. from October 1991
to March 1994. He previously served for six years with the public accounting
firm of KPMG Peat Marwick, most recently as a Senior Manager.

      C. Bryan Pettigrew III has served as Vice President of Marketing of the
Partnership since November 1999. Mr. Pettigrew served as Director of Marketing
for the Partnership from June 1995 until November 1999. Prior to that, Mr.
Pettigrew was Director of Promotions at Remington Park in Oklahoma City,
Oklahoma since 1989.

      James H. Paulin, Jr.has served as Vice President of the Partnership since
November 1993. Mr. Paulin served as Secretary-Treasurer of Federated Development
Company ("FEDERATED") from May 1983 to December 1998, and Secretary of Federated
from March 1977 to December 1998. Federated is a Texas corporation primarily
engaged in the management of real estate investments and, through its position
as a significant stockholder of MAXXAM, in the businesses conducted by MAXXAM.

      Charles E. Hurwitz has served as a Director and the Chairman of the Board
of the Managing General Partner since May 1993 and October 1995, respectively.
He served as President of the Managing General Partner from May 1993 until April
1996. Mr. Hurwitz has served as a member of the Board of Directors and the
Executive Committee of MAXXAM since August 1978 and was elected as Chairman of
the Board and Chief Executive Officer of MAXXAM in March 1980. Mr. Hurwitz also
served MAXXAM as President from January 1993 to January 1998. Mr. Hurwitz has
served as a director of Kaiser Aluminum Corporation ("KAISER"), a majority-owned
subsidiary of MAXXAM, since October 1988, and as a director of Kaiser Aluminum &
Chemical Corporation ("KACC"), a fully integrated aluminum producer that is a
subsidiary of Kaiser, since November 1988. Mr. Hurwitz is Chairman of the Board,
Chief Executive Officer and President of MAXXAM Group Inc. ("MGI"), a wholly
owned subsidiary of MAXXAM which is engaged in forest products operations, and
MGI's parent, MAXXAM Group Holdings Inc. ("MGHI"). Mr. Hurwitz has been, since
January 1974, Chairman of the Board and Chief Executive Officer of Federated.

      D. Kent Anderson is a Director of the Managing General Partner per the
designation of the Additional General Partner. Mr. Anderson has been the
Executive Banking Officer of Compass Bank since its April 1996 merger with Post
Oak Bank. From 1991 until the merger, Mr. Anderson was Chairman of the Board and
Chief Executive Officer of Post Oak Bank. From 1988 through October 1991, Mr.
Anderson held several executive positions, including Chairman of the Board, with
First Interstate Bank of Texas, N.A. Mr. Anderson is currently a Trustee and
member of the Board of Governors of Rice University. He has served on several
State of Texas committees and on the Board of the Greater Houston Partnership,
the Texas Chamber of Commerce, and the Texas Research League.

      J. Kent Friedman is a Director of the Managing General Partner per the
designation of the Additional General Partner. Mr. Friedman was appointed
General Counsel of MAXXAM in December 1999. He served as Acting General Counsel
of MAXXAM from March 1998 until his appointment as General Counsel. Mr. Friedman
was a partner of Mayor, Day, Caldwell & Keeton, L.L.P., a Houston law firm, from
1982 through December 1999. Prior to such time Mr. Friedman was a partner at
Butler & Binion, also a Houston law firm. Since December 1999, Mr. Friedman also
serves as Senior Vice President and General Counsel of Kaiser and KACC and as a
manager on the Board of Managers of Scotia Pacific Company LLC, an indirect
subsidiary of MGI engaged in forest products operations.

      Paul N. Schwartz is a Director and Vice President of the Managing General
Partner. Mr. Schwartz was named a Director, President and Chief Operating
Officer of MAXXAM in January 1998. Mr. Schwartz has served as Chief Financial
Officer of MAXXAM since January 1995. From January 1995 to January 1998 he also
served as Executive Vice President of MAXXAM. Prior to that he served as Senior
Vice President-Corporate Development of MAXXAM from June 1987 to January 1995,
as Vice President-Corporate Development from July 1985 to June 1987 and as Vice
President since 1982. Mr. Schwartz also serves as a Director and a Vice
President and Chief Financial Officer of MGHI and MGI and as a Vice President
and a manager on the Board of Managers of Scotia Pacific Company LLC, an
indirect subsidiary of MGI engaged in forest products operations.

      Directors of the Managing General Partner are elected annually to serve
for one year and until their successors are duly elected, qualified, and
approved by the Racing Commission. Each director of the Managing General Partner
is required to be approved by the Racing Commission. The current directors of
the Managing General Partner have received the approval of the Racing
Commission.

ITEM 11.     EXECUTIVE COMPENSATION

   SUMMARY COMPENSATION TABLE

      The following table sets forth compensation information, cash and
non-cash, for each of the Partnership's last three completed fiscal years with
respect to (a) all individuals serving as the Partnership's chief executive
officer during the last fiscal year, and (b) the other most highly compensated
executive officers of the Partnership (other than the current chief executive
officer) who were serving as executive officers of the Partnership at the end of
1999 and who received over $100,000 in aggregate salary and bonus in respect of
1999.

<TABLE>
<CAPTION>

                                                        ANNUAL COMPENSATION
                                            ---------------------------------------------
              (A)                  (B)           (C)             (D)             (E)             (F)
                                                                                                 (1)
                                                                             OTHER ANNUAL     ALL OTHER
                                                SALARY          BONUS       COMPENSATION(1)  COMPENSATION
 NAME AND PRINCIPAL POSITION      YEAR            ($)            ($)             ($)              ($)
-----------------------------   -------     --------------   ------------   ---------------  ------------
<S>                             <C>         <C>              <C>            <C>              <C>
Robert L. Bork (2)                1999            225,000          88,333         -               -
   Senior Vice President and      1998            216,320          63,333         -               -
      General Manager             1997            208,000          35,000         -               -

Ann McGovern                      1999            125,000          38,333         -               -
   Vice President of              1998            119,000          28,333         -               -
      Operations                  1997            114,400          15,000         -               -

Michael J. Vitek                  1999            115,000          38,333         -               -
   Vice President of              1998            107,000          28,333         -               -
      Finance                     1997             93,600          15,000         -               -

<FN>
---------------------------
(1)  Excludes perquisites and other personal benefits because the aggregate
     amount of such compensation is the lesser of either $50,000 or 10% of
     the total of annual salary and bonus reported for the named executive
     officer.
(2)  Mr. Bork served as chief executive officer of the Partnership during 1997,
     1998 and 1999.  Mr. Bork commenced his employment with the Partnership on
     October 25, 1995.

</FN>
</TABLE>

   EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
   ARRANGEMENTS

      Agreements have been entered into with each of Messrs. Bork and Vitek and
Ms. McGovern regarding their employment. Mr. Bork's agreement provides for a
base annual salary of $200,000 and a bonus of $25,000 on the first anniversary
date of his employment. The agreement further provides that commencing the
second year of employment he will participate in an incentive compensation plan
of the Partnership. Mr. Bork's agreement also provided for payment of certain
relocation expenses. The incentive compensation plan referred to above was
provided for in general terms pursuant to the Plan; however, no specific details
have been proposed or formulated to date with respect to such an incentive plan.
Ms. McGovern's agreement provides for a base annual salary of $110,000 per year,
a discretionary bonus of $10,000 in the first year of employment and the payment
of certain relocation expenses. The agreement also indicated that Ms. McGovern
would be considered for inclusion in the prior employee incentive program of the
Partnership. Mr. Vitek's agreement provides for a base annual salary of $90,000
and a discretionary bonus of $15,000 after the first year of employment.

      On December 30, 1998, Messrs. Bork and Vitek, along with Ms. McGovern,
were each awarded a one-time bonus with respect to the Partnership's 1998
operating results. Each of these bonuses is payable in three equal annual
installments, with the first two of such installments having been received by
each of the executives on December 31, 1998 and December 31, 1999, respectively,
and with the remaining installment of like amount being due and payable on
December 31, 2000. Each of the executives will receive the remaining installment
of the bonus so long as he or she continues to be employed by the Partnership as
of the respective payment dates.

   COMPENSATION OF DIRECTORS AND POLICY COMMITTEE MEMBERS

      Messrs. Anderson and Friedman received $25,000 per year through December
31, 1999, plus reimbursement of expenses, as compensation for their services.
The other directors of the Managing General Partner are reimbursed for their
expenses but are not otherwise compensated by the Partnership for their services
as such (including, beginning in 2000, Mr. Friedman as he has joined MAXXAM as
General Counsel).

   COMPENSATION COMMITTEE REPORT

      SHRP General Partner, Inc. is the managing general partner of the
Partnership, and the names appearing below are all of the directors of SHRP
General Partner, Inc. The Board of Directors of SHRP General Partner, Inc. (the
"BOARD") acts with respect to compensation matters, as a compensation committee
has not been appointed.

      The executive officers named in the Summary Compensation Table have been
retained and are compensated in accordance with their respective individual
employment letter agreements. In reaching those agreements, the customary levels
and types of pay prevalent for such positions in the horse racing industry were
considered and served as guidelines. The individual salary histories and
previous experience of the executives were also considered as was the timing
within which the Partnership needed to replace previously discharged executives.
Other than participation in a group health insurance program, which is partially
employer-provided, and 401(k) matching of 4% of qualifying compensation, the
only non-salary direct compensation being provided to such executives are
incentive bonuses. Executives may be considered for a discretionary bonus on an
annual basis. The President of the Partnership outlines functions and goals for
each executive officer and formulates bonus levels for executive officers (with
the advice and consent of the Board in certain instances).

                                               D. Kent Anderson
                                               J. Kent Friedman
                                               Charles E. Hurwitz
                                               James D. Noteware
                                               Paul N. Schwartz


ITEM 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT

   THE PARTNERSHIP

      The following table sets forth the beneficial ownership of partnership
interests in the Partnership as of March 1, 2000 of (i) each person known by the
Partnership to beneficially own five percent or more of the outstanding
partnership interests, (ii) each director of the Managing General Partner who
owns a partnership interest, and (iii) all directors and officers of the
Managing General Partner and the Partnership as a group. Except as otherwise
indicated below, each of the persons named in the table has sole voting and
investment power with respect to the partnership interest shown as beneficially
owned by him.

<TABLE>
<CAPTION>

          NAME AND ADDRESS OF                                                            AGGREGATE
            BENEFICIAL OWNER                         TYPE OF INTEREST              PARTNERSHIP INTEREST
-----------------------------------------  ----------------------------------   --------------------------
<S>                                        <C>                                  <C>
New SHRP Acquisition, Inc. (1)                       Limited Partner                        64.8%
SHRP Equity, Inc. (2)                          Additional General Partner                   33.3%

<FN>
(1)  MAXXAM owns all of the issued and outstanding shares of common stock of
     New SHRP Acquisition, Inc.  Mr. Charles E. Hurwitz and affiliates of
     Federated Development Company ("FEDERATED") collectively own 99.2% and
     39.9% of MAXXAM's Class A preferred stock and common stock, respectively
     (resulting in a combined voting control of approximately 69.8%).  Mr.
     Hurwitz is the Chairman of the Board and Chief Executive Officer of MAXXAM
     and Chairman and Chief Executive Officer of Federated.  Federated is wholly
     owned by Mr. Hurwitz, members of his immediate family and trusts for the
     benefit thereof.
(2)  The outstanding shares of stock of SHRP Equity, Inc. were issued to the
     holders of allowed unsecured claims in connection with the bankruptcy
     proceedings of the Partnership. Wholly owned subsidiaries of MAXXAM,
     beneficially own 99.5% of the issued and outstanding stock of SHRP
     Equity, Inc. which equates to a 33.1% interest in the Partnership.

</FN>
</TABLE>

   THE MANAGING GENERAL PARTNER

      Sam Houston Entertainment Corp., a wholly owned subsidiary of MAXXAM, owns
all of the common stock of the Managing General Partner.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Certain individuals employed by MAXXAM and its wholly owned subsidiaries
provide management, legal, financial, corporate development and other services
to the Partnership from time to time. These affiliates are reimbursed for their
estimated actual costs incurred in providing services to the Partnership. As of
March 1, 2000, MAXXAM and its subsidiaries have received an aggregate of
$495,334 in respect of such services performed in 1999.

      J. Kent Friedman, former AGP Director, was a partner of a law firm through
December 1999 that provided services to the Partnership. In addition, such law
firm has represented MAXXAM in various matters not related to the Partnership.
The Partnership had an agreement with Mr. Friedman's law firm to coordinate
legislative efforts. As of March 1, 2000, Mr. Friedman's former law firm has
received an aggregate of $37,335 in respect of such services performed in 1999.

   See also Notes 8 and 9 to the Consolidated Financial Statements appearing in
Item 8.

                                     PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A)   INDEX TO FINANCIAL STATEMENTS

   1.   FINANCIAL STATEMENTS (APPEARING IN ITEM 8):
        Report of Independent Certified Public Accountants
        Consolidated balance sheets at December 31, 1999 and 1998
        Consolidated statements of operations for the three years
            ended December 31, 1999
        Consolidated statements of partners' deficit for the three years ended
            December 31, 1999
        Consolidated statements of cash flows for the three years ended
            December 31, 1999
        Notes to consolidated financial statements

   2.   FINANCIAL STATEMENT SCHEDULES:
        All schedules are inapplicable or the required information is included
        in the financial statements or the notes thereto.

(B)   REPORTS ON FORM 8-K

        None.

(C)   EXHIBITS

        Reference is made to the Index of Exhibits immediately preceding the
        exhibits hereto (beginning on page 44) which index is incorporated
        herein by reference.


                                   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.


                                            SAM HOUSTON RACE PARK, LTD.

Date: March 22, 2000
                                         By:   /S/ MICHAEL J. VITEK
                                                 Michael J. Vitek,
                                             Vice President of Finance

      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.


Date: March 22, 2000
                                         By:   /S/ ROBERT L. BORK
                                            Robert L. Bork General Manager
                                            (Principal Executive Officer)

Date: March 22, 2000
                                         By:   /S/ MICHAEL J. VITEK
                                               Michael J. Vitek,
                                           Vice President of Finance
                                           (Principal Financial and
                                              Accounting Officer)


                                            SAM HOUSTON RACE PARK, LTD.
                                         By:  SHRP General Partner, Inc.
                                          its Managing General Partner

Date: March 22, 2000
                                         By:   /S/ CHARLES E. HURWITZ
                                              Charles E. Hurwitz,
                                             Chairman of the Board

Date: March 22, 2000
                                         By:   /S/ PAUL N. SCHWARTZ
                                           Paul N. Schwartz, Director

Date: March 22, 2000
                                         By:   /S/ JAMES D. NOTEWARE
                                          James D. Noteware, Director

Date: March 22, 2000
                                         By:   /S/ D. KENT ANDERSON
                                           D. Kent Anderson, Director

Date: March 22, 2000
                                         By:   /S/ J. KENT FRIEDMAN
                                          J. Kent Friedman, Director
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    Exhibit
    Number                                 Description
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<S>             <C>
     3.1        Third Amended and Restated Limited Partnership Agreement of
                Sam Houston Race Park, Ltd. dated October 6, 1995 (incorporated
                herein by reference to Exhibit 3.1 to the Partnership's Form
                10-Q dated September 30, 1995)

     4.1        Amended and Restated Indenture dated October 6, 1995 by and
                among the Partnership, New SHRP Capital Corp., SHRP General
                Partner, Inc. and First Bank National Association, Trustee,
                including the related form of Note (incorporated herein by
                reference to Exhibit 4.1 to the Partnership's Form 10-Q dated
                September 30, 1995)

     4.2        Amended and Restated Deed of Trust, Assignment, Security
                Agreement and Financing Statement dated October 6, 1995 among
                the Partnership, Richard Prokosch, as Trustee, and First Bank
                National Association, as Mortgagee (incorporated herein by
                reference to Exhibit 4.2 to the Partnership's Form 10-Q dated
                September 30, 1995)

     4.3        Deed of Trust, Assignment, Security Agreement and Financing
                Statement dated October 6, 1995 among the Partnership, Richard
                Prokosch, as Trustee, and First Bank National Association, as
                Mortgagee (incorporated herein by reference to Exhibit 4.3 to
                the Partnership's Form 10-Q dated September 30, 1995)

     4.4        Amended and Restated License Negative Pledge dated October 6,
                1995 executed by the Partnership in favor of Trustee
                (incorporated herein by reference to Exhibit 4.4 to the
                Partnership's Form 10-Q dated September 30, 1995)

     4.5        Amended and Restated Real Estate Tax Escrow and Security
                Agreement dated July 1, 1997 among the Partnership, Trustee and
                Southwest Bank of Texas

     9          Voting Agreement dated October 6, 1995 among SHRP General
                Partner, Inc., Sam Houston Entertainment Corp., SHRP Equity,
                Inc. and MAXXAM Inc. (incorporated herein by reference to
                Exhibit 9 to the Partnership's Form 10-Q dated September 30,
                1995)

     10.1       Form of Line of Credit Agreement dated October 6, 1995 between
                the Partnership and certain lenders (the "LINE OF CREDIT
                AGREEMENT") (incorporated herein by reference to Exhibit 10.1
                to the Partnership's Form 10-Q dated September 30, 1995)

     10.2       Form of Cash Escrow Agreement with respect to the Line of
                Credit Agreement (incorporated herein by reference to Exhibit
                10.2 to the Partnership's Form 10-Q dated September 30, 1995)

     10.3       Guaranty of MAXXAM Inc. dated October 6, 1995 in favor of the
                Partnership with respect to the obligations of SHRP General
                Partner, Inc. under the Line of Credit Agreement (incorporated
                herein by reference to Exhibit 10.3 to the Partnership's Form
                10-Q dated September 30, 1995)

     10.4       Registration Rights Agreement dated October 6, 1995 among the
                Partnership, SHRP Equity, Inc. and First Bank National
                Association (incorporated herein by reference to Exhibit 10.5
                to the Partnership's Form 10-Q dated September 30, 1995)

     10.5       Instrument of Adherence of MAXXAM Inc. dated October 6, 1995
                (incorporated herein by reference to Exhibit 10.7 to the
                Partnership's Form 10-Q dated September 30, 1995)

     10.6       Instrument of Adherence of Charles E. Hurwitz dated October 6,
                1995 (incorporated herein by reference to Exhibit 10.8 to the
                Partnership's Form 10-Q dated September 30, 1995)

     10.7       Horsemen's Agreement dated November 26, 1996 between Texas
                Thoroughbred HBPA, Inc. and the Partnership (incorporated
                herein by reference to Exhibit 10.13 to the Partnership's Form
                10-K dated December 31, 1996)

     10.8       Addendum dated December 1, 1997 to Horsemen's Agreement between
                the Texas Thoroughbred HBPA, Inc. and the Partnership

     10.9       Horsemen's Agreement dated March 6, 1997 between the Texas
                Horsemen's Benevolent and Protective Association and
                the Partnership

     10.10      Addendum dated December 1, 1997 to Horsemen's Agreement between
                the Texas Horsemen's Benevolent and Protective Association and
                the Partnership

     10.11      Totalisator Services Agreement dated September 8, 1997 between
                Autotote Systems, Inc. and the Partnership (incorporated herein
                by reference to Exhibit 10.1 to the Partnership's Form 10-Q for
                the quarter ended September 30, 1997)

     10.12      Promissory Note dated December 13, 1994 by the Partnership in
                favor of Harris County, Texas (incorporated herein by reference
                to Exhibit 10.41 to the Partnership's Form 10-K for the year
                ended December 31, 1994)

     10.13      Satellite Transmission Agreement dated February 24, 1998 between
                Autotote Communications Services, Inc. and the Partnership

     10.14      Agreement dated December 30, 1993 between the Partnership and
                International Sound Corporation (incorporated herein by
                reference to Exhibit 10.45 to the Partnership's Form 10-K for
                the year ended December 31, 1994)

     10.15      Amendment to Agreement dated December 30, 1993 between the
                Partnership and International Sound Corporation (incorporated
                herein by reference to Exhibit 10.1 to the Partnership's
                Form 10-Q dated June 30, 1997)

     10.16      Alcoholic Beverage Concession Agreement dated September 19, 1996
                between 97, Inc. and the Partnership (incorporated herein by
                reference to the Partnership's Form 10-K dated December 31,
                1996)

     *10.17     Horsemen's Agreement dated January 11, 2000 between Texas
                Thoroughbred HBPA, Inc. and the Partnership (incorporated here
                by reference to Exhibit 10.17 to the Partnership's Form 10-K
                for the year ended December 31, 1999)

     *10.18     Totalisator Services Agreement dated February 1, 2000 between
                Autotote Systems, Inc. and the Partnership (incorporated herein
                by reference to Exhibit 10.18 to the Partnership's Form 10-K
                for the year ended December 31, 1999)

     *10.19     Stock Purchase Agreement dated January 6, 2000 between Ladbroke
                Racing Corporation and the Partnership (incorporated herein by
                reference to Exhibit 10.19 to the Partnership's Form 10-K for
                the year ended December 31, 1999)

                     Executive Compensation Plans and Arrangements
                     ---------------------------------------------
     10.20      Employment Agreement, dated November 24, 1992 between MAXXAM
                Property Company and James D. Noteware (incorporated herein by
                reference to Exhibit 10.33 to the Partnership's Form 10-K for
                the year ended December 31, 1994)

     10.21      Letter Agreement, dated August 19, 1994 between the Partnership
                and Ann M. McGovern (incorporated herein by reference to
                Exhibit 10.34 to the Partnership's Form 10-K for the year ended
                December 31, 1994)

     10.22      Letter Agreement, dated November 11, 1994 between the
                Partnership and Michael J. Vitek (incorporated herein by
                reference to Exhibit 10.35 to the Partnership's Form 10-K for
                the year ended December 31, 1994)

     10.23      Agreement between the Partnership and Robert L. Bork
                (incorporated herein by reference to Exhibit 10.10 to the
                Partnership's Form 10-Q dated September 30, 1995)

                                       Other
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     *27        Financial Data Schedule

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* Included with this filing.

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