10QSB

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

                                   FORM 10-QSB




[X]  Quarterly  report under Section 13 or 15(d) of the Securities  Exchange Act
     of 1934

     For the quarterly period ended September 30, 2004

[ ]  Transition  report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

             For the transition period from __________ to __________

     Commission file number 1-12522

                              EMPIRE RESORTS, INC.
        (Exact name of Small Business Issuer as specified in its charter)


          DELAWARE                                       13-3714474
(State or Other Jurisdiction of          (I.R.S. Employer Identification Number)
Incorporation or Organization)


               RT 17B, P.O. BOX 5013, MONTICELLO, NEW YORK, 12701
                    (Address of Principal Executive Offices)


                             (845) 794-4100 ext 581
                (Issuer's Telephone Number, Including Area Code)

Check  whether the issuer (1) filed all reports  required to be filed by section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.      Yes  X   No
                                                                   ---

     The number of shares outstanding of issuer's classes of common stock, as of
November 15, 2004 was 26,075,242.

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




                      EMPIRE RESORTS, INC. AND SUBSIDIARIES

                                      INDEX


PART I                         FINANCIAL INFORMATION                    PAGE NO.

Item 1.  Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheet as of September 30, 2004....     3

         Condensed Consolidated Statements of Operations for the three
            and nine months Ended September 30, 2004 and 2003.............     4

         Condensed Consolidated Statements of Cash Flows for the nine
            months ended September 30, 2004 and 2003......................     5

         Notes to Condensed Consolidated Financial Statements.............  6-22

Item 2.  Management's Discussion and Analysis or Plan of Operation........ 22-29

Item 3.  Controls and Procedures..........................................    30




PART II                        OTHER INFORMATION

Item 1.  Legal Proceedings................................................    31

Item 6.  Exhibits.........................................................    32

         Signatures.......................................................    33


                                       2




                                     PART I
                          ITEM 1. FINANCIAL INFORMATION

                      EMPIRE RESORTS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 2004
                                   (UNAUDITED)
                                 (IN THOUSANDS)



                                                                         ASSETS

Current assets:
     Cash and cash equivalents                                         $ 14,190
     Restricted cash                                                        115
     Accounts receivable                                                    779
     Prepaid expenses and other current assets                            1,097
                                                                       --------
           Total current assets                                          16,181

Property and equipment, net                                              31,464
Advances- Tribal Gaming Authorities                                         540
Deferred financing costs, net of accumulated
       amortization of $56                                                3,040
Deferred development costs                                                3,890
Gaming license and development costs                                      6,252
                                                                       --------
Total assets                                                           $ 61,367
                                                                       ========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
    Accounts payable                                                      2,995
    Construction costs payable                                            2,714
    Accrued expenses and other current liabilities                        3,480
                                                                       --------
       Total current liabilities                                          9,189

Senior convertible notes                                                 65,000
                                                                       --------
Total liabilities                                                        74,189
                                                                       --------

Stockholders' deficit:
     Common stock, $.01 par value, 75,000 shares
        authorized, 26,075 issued and outstanding                           261
     Preferred stock, 5,000 shares authorized
         $.01 par value;
                 Series B, 44 issued and outstanding                         --
                 Series E, $10.00 redemption value, 1,731
                      issued and outstanding                              6,855
     Additional paid in capital                                          14,521
     Accumulated deficit                                                (34,459)
                                                                       --------
       Total stockholders' deficit                                      (12,822)
                                                                       --------
Total liabilities and stockholders' deficit                            $ 61,367
                                                                       ========

     See accompanying notes to condensed consolidated financial statements.


                                       3




                      EMPIRE RESORTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)



                                                   THREE MONTHS ENDED          NINE MONTHS ENDED
                                                      SEPTEMBER 30,               SEPTEMBER 30,
                                                   2004          2003          2004          2003
                                                --------      --------      --------      --------

Revenues                                        $ 21,914      $  2,641      $ 27,079      $  7,473
                                                --------      --------      --------      --------

Expenses:
   Operating costs                                20,789         1,488        27,645         4,209
   Selling, general and administrative             1,688           956         7,740         3,764
   Depreciation and amortization                     316           178           336           526
   Amortization of deferred financing costs           56            --           300            --
   Interest expense, net                             598           166           870           497
                                                --------      --------      --------      --------
            Total expenses                        23,447         2,788        36,891         8,996
                                                --------      --------      --------      --------

Net loss                                          (1,533)         (147)       (9,812)       (1,523)
Dividends paid on preferred stock                     --            --            30            --
Cumulative undeclared dividends
     on preferred stock                              388            --         1,122            --
                                                --------      --------      --------      --------
Net loss applicable to common shares            $ (1,921)     $   (147)     $(10,964)     $ (1,523)
                                                ========      ========      ========      ========
Weighted average common shares
     outstanding, basic and diluted               26,075        18,219        24,905        18,219
                                                ========      ========      ========      ========

Loss per common share, basic and diluted        $  (0.07)     $  (0.01)     $  (0.44)     $  (0.08)
                                                ========      ========      ========      ========


     See accompanying notes to condensed consolidated financial statements.


                                       4




                      EMPIRE RESORTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)
                                 (IN THOUSANDS)

                                                                             2004          2003
                                                                          --------      --------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                $ (9,812)     $ (1,523)
  Adjustments to reconcile net loss to net cash provided by (used in)
     operating activities:
       Depreciation and amortization                                           336           526
       Amortization of deferred financing costs                                300            --
       Accrued interest                                                         --           499
       Stock-based compensation                                              2,227            --
     Changes in operating assets and liabilities:
       Restricted cash                                                           7           (95)
       Accounts receivable, net                                                (20)          427
       Prepaid expenses and other current assets                              (843)           34
       Accounts payable                                                     (2,353)          633
       Accrued expenses and other current liabilities                        2,493           453
                                                                          --------      --------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                         (7,665)          954
                                                                          --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of property and equipment                                 (27,959)         (526)
       Cash acquired from acquisition                                           18            --
       Advances- Tribal Gaming Authorities                                    (155)           --
       Gaming license and development costs                                 (2,086)       (1,577)
                                                                          --------      --------

NET CASH USED IN INVESTING ACTIVITIES                                      (30,182)       (2,103)
                                                                          --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of stock                                            30,375            --
     Proceeds from exercise of stock options and warrants                      119            --
     Stock issuance expenses                                                (2,317)           --
     Proceeds from issuance of senior convertible notes                     62,218            --
     Excess of market value over carrying value of  property
       and equipment purchased                                             (30,825)           --
     Repayment of promissory notes                                          (5,073)           --
     Repayment of note payable, bank                                        (3,470)           --
     Deferred financing costs                                                 (314)           --
     Preferred stock dividends paid                                            (30)           --
     Members' capital contributions                                            ---         1,314
                                                                          --------      --------

NET CASH PROVIDED BY FINANCING ACTIVITIES                                   50,683         1,314
                                                                          --------      --------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                   12,836           165

CASH AND CASH EQUIVALENTS, beginning of period                               1,354           644
                                                                          --------      --------

CASH AND CASH EQUIVALENTS, end of period                                  $ 14,190      $    809
                                                                          ========      ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for interest during the period                             $    319      $    503

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
     Issuance of promissory note and redemption of common stock           $  5,073      $     --
     Accrued construction costs                                           $  2,714      $     --
     Common stock issued in settlement of preferred stock dividend        $    210      $     --
     Common stock issued for development costs                            $  1,450      $     --
     Common stock issued in settlement of accounts payable                $     --      $    281
     Deferred financing costs of senior convertible notes                 $  2,782      $     --


     See accompanying notes to condensed consolidated financial statements.

                                       5




                      EMPIRE RESORTS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

BASIS FOR PRESENTATION

          The unaudited Condensed Consolidated Balance Sheet as of September 30,
2004,  the unaudited  Condensed  Consolidated  Statements of Operations  for the
three and nine  months  ended  September  30, 2004 and the  unaudited  Condensed
Consolidated  Statement  of Cash Flows for the nine months ended  September  30,
2004 include the accounts of Empire Resorts, Inc ("Empire" or "the Company") and
certain of the assets and liabilities of Catskill  Development,  L.L.C. ("CDL"),
which were merged into the Company effective January 12, 2004. The operations of
CDL for the period  January 1, 2004  through  January 11,  2004,  which were not
significant,   have  been  included  in  the  unaudited  Condensed  Consolidated
Statements of Operations for the three and nine months ended  September 30, 2004
and Cash Flows for the nine months  ended  September  30, 2004.  For  accounting
purposes,  CDL is deemed to have been the  acquirer in the merger.  Accordingly,
the comparative  unaudited Condensed  Consolidated  Statements of Operations for
the three and nine months ended  September  30, 2003 and Cash Flows for the nine
months ended  September 30, 2003  represent the accounts of CDL only. The assets
that were not  transferred  through  the merger  were  leased to the Company and
subsequently  purchased on July 26, 2004 from CDL, a related  party and recorded
at CDL's carrying value.

          Although  Empire was the legal  survivor in the merger and remains the
registrant  with  the  Securities  and  Exchange  Commission,  under  accounting
principles generally accepted in the United States, the merger was accounted for
as a reverse  acquisition,  whereby CDL was  considered the "acquirer" of Empire
for financial  reporting  purposes as CDL's members  controlled more than 50% of
the post  transaction  combined  company.  Among other  matters,  reverse merger
accounting  requires  Empire to present in all  financial  statements  and other
public information filings, prior historical and other information of CDL, and a
retroactive  restatement  of CDL  historical  shareholders  investment  for  the
equivalent number of shares of common stock received in the merger. Accordingly,
the  accompanying  consolidated  financial  statements  present  the  results of
operations  of CDL for the three and nine months  ended  September  30, 2003 and
reflect  the  acquisition  of Empire as of January  1, 2004  under the  purchase
method of  accounting.  Subsequent  to January 1, 2004,  the  operations  of the
Company reflect the combined operations of the former Empire and CDL.

          The accompanying unaudited consolidated financial statements have been
prepared in accordance with the accounting  principles generally accepted in the
United States of America  ("GAAP") and with the  requirements of Form 10-QSB and
Regulation  S-B as applicable  to interim  financial  information  and following
other requirements of the Securities and Exchange Commission ("SEC") for interim
reporting.  Accordingly,  the unaudited consolidated financial statements do not
include all of the  information  and footnotes  normally  required by accounting
principles  generally  accepted  in the United  States of America  for  complete
financial  statements.  In the opinion of  management,  all normal and recurring
adjustments and accruals considered  necessary for a fair presentation have been
included. Operating results for the three and nine-month periods ended September
30, 2004 are not necessarily  indicative of the results that may be expected for
the year ended December 31, 2004.

          For  further  information,  refer  to  the  financial  statements  and
footnotes thereto included in the Company's annual  shareholders' report on Form
10-KSB for the year ended December 31, 2003.

NOTE A. NATURE OF BUSINESS

          Empire was organized as a Delaware  corporation on March 19, 1993, and
since that time has served as a holding company for various subsidiaries engaged
in the ownership,  development and operation of gaming  facilities.  The Company
incorporated  under the name Alpha Hospitality  Corporation and changed its name
to Empire Resorts,  Inc. in May, 2003.  During the past three years, the Company
has concentrated on developing  gaming  operations in New York State. As part of
this effort, the Company has divested itself of various ancillary  interests and
terminated certain unprofitable operations.

          Through  its   subsidiaries,   the   Company   intends  to  develop  a
multi-dimensional  gaming resort in  Monticello,  New York that  includes  horse
racing,  VGMs and a $500  million  Native  American  casino  entitled the Cayuga
Catskill Resort and other gaming and non-gaming resort  development,  to include
the development of Class III gaming facilities both within and outside the State
of New York, and Sullivan County. The Company also continues to explore numerous
other possible development projects.


                                       6


          The Company operates through three principal subsidiaries,  Monticello
Raceway Management,  Inc. ("Monticello Raceway  Management"),  Monticello Casino
Management,   LLC  ("Monticello   Casino  Management")  and  Monticello  Raceway
Development  Company, LLC ("Monticello Raceway  Development").  Currently,  only
Monticello Raceway Management  generates revenue, as the operations of the other
two  subsidiaries  are contingent  upon the receipt of certain federal and state
regulatory approvals.

RACEWAY OPERATIONS

          Monticello  Raceway  Management,  a wholly owned subsidiary,  is a New
York corporation  that operates  Monticello  Raceway (the "Raceway"),  a harness
horse racing  facility  located in  Monticello,  New York,  and held a leasehold
interest in the surrounding property that it subsequently  purchased on July 26,
2004 from CDL, a related party, and recorded at CDL's carrying value.

          The Raceway began  operation in 1958 and offers  pari-mutuel  wagering
and live harness racing throughout the year, along with year round  simulcasting
from various harness and thoroughbred racetracks across the country. The Raceway
derives its revenue  principally  from (i) wagering at the Raceway on live races
run at the Raceway;  (ii) fees from wagering at out-of-state  locations on races
simulcast from the Raceway using export simulcasting; (iii) revenue allocations,
as  prescribed  by law,  from  betting  activity  at New York  City,  Nassau and
Catskill Off Track Betting facilities  (certain of such revenues are shared with
Yonkers Raceway based on a pro rata market share  calculation  updated monthly);
(iv) wagering at the Raceway on races  broadcast  from  out-of-state  racetracks
using  import  simulcasting;  and (v)  admission  fees,  program and racing form
sales, the sale of food and beverages and certain other ancillary activities.

MIGHTY M GAMING AT MONTICELLO RACEWAY

          A video gaming  machine  ("VGM") is an electronic  gaming device which
allows a patron to play  electronic  versions of various lottery games of chance
and is similar in appearance to a traditional slot machine. On October 31, 2001,
the State of New York enacted a bill designating seven racetracks, including the
Raceway,  to install and operate  VGMs.  Under the  program,  the New York State
Lottery made an initial  allocation  of 1,800 VGM's to the Raceway.  On June 30,
2004,  Monticello Raceway Management began operating 1,744 VGMs on 45,000 square
feet of floor space at the Raceway after completing approximately $24 million of
renovations to the facility.

CASINO DEVELOPMENT

          On  April 3,  2003,  the  Cayuga  Nation  of New  York,  (the  "Cayuga
Nation"),  a  federally  recognized  Indian  Nation,  CDL and  certain  of CDL's
affiliates,  including a  subsidiary  of the  Company,  entered into a series of
agreements  which provide for the development of a trust land casino adjacent to
the Raceway.  These  agreements  were  extended on June 25, 2004 to December 31,
2004. In furtherance  of these  transactions,  on April 10, 2003,  these parties
filed  with the  Eastern  Regional  Office of the  Bureau of Indian  Affairs  an
application  requesting  that the Secretary of the Interior  acquire in trust on
behalf of the Cayuga Nation a 29 acre parcel of land in Monticello,  New York to
be used for gaming  purposes.  On April 27, 2004,  the Eastern  Regional  Office
("ERO") of the Bureau of Indian Affairs ("BIA") completed its review of the plan
by the Cayuga Nation and the Company to build a $500 million  casino on these 29
acres.  The ERO  recommended  that a finding be made that the project was in the
best  interests  of the Cayuga  Nation and not  detrimental  to the  surrounding
community  and  recommended  that the 29 acre  site be taken  into  trust by the
United States as a site for gaming activities.

          There are two  significant  preconditions  that must be met before the
Cayuga Nation can operate gaming on this 29 acre site. First,  title to the land
must be transferred to the United States and accepted into trust for the benefit
of the Cayuga  Nation.  Second,  the Cayuga  Nation  must enter into a Class III
gaming  compact with the State of New York. On June 10, 2004, the Company issued
a press release  announcing  the Cayuga Nation and the State of New York entered
into a Memorandum of  Understanding  (the "MOU") pursuant to which,  among other
things,  the parties agreed that to help settle the Cayuga Nation's  outstanding
land claim against the State of New York, the State of New York would enter into
a gaming compact with the Cayuga Nation authorizing the Cayuga Nation to operate
a Class III gaming  facility at the Raceway  following  receipt of all requisite
state and federal approvals. The MOU set a target date of September 30, 2004 for
the  implementation  of all such  necessary  approvals.  The  September 30, 2004
target date under the MOU,  however,  expired without the  implementation of the
necessary  approvals.  The Company has been  advised by  representatives  of the
Cayuga  Nation that they expect the Company to continue to pursue the  objective
of their agreements and the Company has been informed of some continuing contact
between the Cayuga Nation and the State of New York.  However,  to the knowledge
of the Company,  there are continuing  differences  between the parties in their
efforts to proceed under the MOU.  Moreover,  the most recent  active  proposals
under consideration vary in material respects from the framework outlined in the
MOU. Unless the differences between the parties are resolved expediously,  it is
unlikely that the approvals  contemplated  by the MOU will be achieved  prior to
the expiration of the agreements on December 31, 2004.
                                       7



          After  December  31, 2004,  the Cayuga  Nation and the Company will be
free to either renew or modify the current agreements or to seek other partners.
The  Company has been and  intends to  continue  to explore  future  development
opportunities,  including both gaming and non-gaming resort  development.  These
alternatives  include the development of Class III gaming facilities both within
and outside the State of New York, including  discussions with persons owning or
controlling  other locations within and outside  Sullivan County.  The Company's
existing  letter  agreement with the Cayuga Nation  contains broad language that
restricts the ability of the parties to hold certain  discussions  pertaining to
development of another Class III gaming  facility  within  Sullivan County until
after December 31, 2004. The Company  intends to respect the purposes and intent
of this agreement,  but deems it prudent to be active in exploring its strategic
alternatives at this time.

          On July 7, 2004,  the  Appellate  Division of the Supreme Court of the
State of New  York  upheld  the  trial  court's  validation  of the  legislation
authorizing  the Governor of the State of New York to enter into gaming compacts
with federally recognized Native American tribes to provide for Class III gaming
on reservation land within the State of New York. The decision has been appealed
to the highest court of New York,  the Court of Appeals,  which may reverse this
ruling.  In the event of a reversal by the Court of Appeals,  we may not be able
to proceed with the development of the Cayuga Catskill Resort.

          On August 19, 2004, the Company  entered into a letter  agreement with
the Seneca-Cayuga Tribe of Oklahoma (the "Tribe"), a federally recognized Indian
Tribe,  to develop a gaming  facility in the Catskills  region of New York.  The
agreement provides for the Company to supply technical and financial  assistance
to the  Tribe  and  to  serve  as  its  exclusive  partner  in the  development,
construction,  financing,  operation and management of the proposed casino.  The
agreement  is for a term of one  year  and  became  effective  immediately.  The
Company  will also  provide  technical  assistance  and support  relating to the
settlement  of its land claim  against the State of New York.  The Company  will
provide  development  assistance of $35,000 per month to the Tribe in connection
with the establishment  and initial  operations of a tribal gaming authority for
New York gaming operations.

          The agreement calls for the Company and the Tribe to separately  enter
into a management  agreement and  development  agreement for the project through
good faith negotiations and submit the management  agreement for approval to the
National Indian Gaming Commission. All of the provisions of the above agreements
relating to the  management  of the casino are subject to review and approval by
the National Indian Gaming Commission prior to becoming effective.  Pending such
approval  and as a result of such  review,  such  provisions  may be  amended or
supplemented by the parties.

          Monticello Raceway Development is a New York limited liability company
with the exclusive right to design, engineer,  develop, construct, and furnish a
Class III Gaming  facility that will be developed on 29 of the 232 acres of land
at the Raceway.  Monticello Raceway  Development also has the exclusive right to
develop the remaining 203 acres of land to provide for activities  supportive of
gaming, such as lodging, food service and retail.

          Monticello  Raceway  Development,  in  connection  with its gaming and
development activities,  capitalizes certain legal,  architectural,  engineering
and  environmental  study fees, as well as other costs  directly  related to the
gaming license and development of the real estate.  During the nine months ended
September 30, 2004,  Monticello Raceway  Development  capitalized  approximately
$3.5  million of costs  associated  with the casino  development  project.  When
operations of the casino commence, the remaining costs after reimbursements will
be systematically recognized over a determinable period.

NOTE B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          REVENUE AND EXPENSE RECOGNITION.  Revenues represent (i) revenues from
pari-mutual  wagering,  (ii) the net win from VGM's and (iii) food and  beverage
sales, net of promotional allowances and other miscellaneous income. The Company
recognizes  revenues from  pari-mutual  wagering earned from live harness racing
and  simulcast  signals  from other tracks at the end of each racing day and are
reflected at gross, before deductions of such related expenses as purses, stakes
and awards. Revenues from the video lottery operations is the difference between
the amount wagered by bettors and the amount paid out to bettors and is referred
to as the net win.  Operating costs include (i) the amounts paid to the New York
State  Lottery for the  State's  share of the net win,  (ii)  amounts due to the
Horsemen  and  Breeder's  for their  share of the net win and (iii) for  harness
racing purses, stakes and awards. Also included in operating costs are the costs
associated with the sale of food, beverage and other miscellaneous items.

          The Company  currently has a point loyalty program  ("Player's  Club")
for its video lottery  customers,  which allows them to earn points based on the
volume of their video lottery  activity.  The points can be redeemed for various
services and merchandise throughout the gaming facility. The Company records the
points as an expense when they are redeemed by the  customers.  The value of all
points outstanding as of September 30, 2004 was approximately $106,000.

          PRINCIPLES  OF  CONSOLIDATION.  The condensed  consolidated  financial
statements   include  the   accounts   of  the  Company  and  its   wholly-owned
subsidiaries.  All significant inter-company balances and transactions have been
eliminated in consolidation.

                                       8


          CASH AND CASH EQUIVALENTS.  Cash and cash equivalents  include cash on
account, demand deposits and certificates of deposit with original maturities of
three months or less at  acquisition.  The Company  maintains  significant  cash
balances  with  financial  institutions,  which are not  covered by the  Federal
Deposit Insurance  Corporation.  The Company has not incurred any losses in such
accounts and believes it is not exposed to any significant  credit risk on cash.
Included in cash and cash equivalents was approximately  $1.4 million segregated
for the Horsemen's share of the VGM revenue.

          RESTRICTED CASH. Under New York State Racing, Pari-Mutuel Wagering and
Breeding  Law,  Monticello  Raceway  Management is obliged to withhold a certain
percentage of certain  types of wagers  towards the  establishment  of a pool of
money,  the use of  which is  restricted  to the  funding  of  approved  capital
improvements.  Periodically  during  the  year,  Monticello  Raceway  Management
petitions the Racing and Wagering  Board to certify that the noted  expenditures
are eligible for reimbursement from the capital improvement fund. The unexpended
balance is shown as restricted cash on the balance sheet.

          ACCOUNTS  RECEIVABLE.  Accounts  receivable are reported at the amount
outstanding.  Management expects to collect the entire amount and,  accordingly,
determined that no allowance is required at September 30, 2004. The Company,  in
the  normal  course of  business,  settled  wagers for other  racetracks  and is
potentially  exposed to credit  risk.  These  wagers are  included  in  accounts
receivable.

          PROPERTY AND EQUIPMENT.  Property and equipment is stated at cost less
accumulated depreciation.  The Company provided for depreciation on property and
equipment used by applying the straight-line method over the following estimated
useful lives:

                                                       ESTIMATED
                                                        USEFUL
                ASSETS                                   LIVES
                ------                                 ---------
                Vehicles                              5-10 years
                Furniture, fixtures and equipment     5-10 years
                Land improvements                      15 years
                Building improvements                  40 years
                Buildings                              40 years

          DEFERRED  FINANCING COSTS.  Deferred  financing costs are amortized on
the  straight-line  method over the term of the senior  convertible  notes. (see
note H )

          DEFERRED  DEVELOPMENT COSTS.  Deferred development costs are stated at
cost.  The Company  capitalizes  certain costs  directly  related to obtaining a
gaming license under a management  agreement with a federally  recognized Native
American  Tribe.   These  capitalized   costs  are  periodically   reviewed  for
impairment.

          GAMING LICENSE AND  DEVELOPMENT  COSTS.  In connection with its gaming
and   development   activities,   the   Company   capitalizes   certain   legal,
architectural,  engineering and environmental study fees, as well as other costs
directly related to the gaming license and development of the real estate. These
capitalized costs are periodically reviewed for impairment.

          IMPAIRMENT OF LONG-LIVED ASSETS. The Company  periodically reviews the
carrying value of its long-lived  assets in relation to historical  results,  as
well as management's best estimate of future trends, events and overall business
climate. If such reviews indicate that the carrying value of such assets may not
be  recoverable,   the  Company  would  then  estimate  the  future  cash  flows
(undiscounted  and  without  interest  charges).  If such  future cash flows are
insufficient  to recover the carrying  amount of the assets,  then impairment is
triggered and the carrying value of any impaired assets would then be reduced to
fair value.

          LOSS PER COMMON SHARE.  The Company  computes basic earnings per share
by dividing  income  available to common  stockholders  by the  weighted-average
common shares  outstanding for the year. Diluted earnings per share reflects the
potential dilution of earnings that could occur if securities or other contracts
to issue common stock were  exercised or converted into common stock or resulted
in the  issuance of common stock that then shared in the earnings of the entity.
Since the effect of  outstanding  options  and  warrants is  anti-dilutive  with
respect to losses,  they have been excluded from the  Company's  computation  of
loss per common share. Therefore,  basic and diluted losses per common share for
the three and nine months ending  September 30, 2004 and 2003 were the same. The
weighted average shares used in the loss per common share  calculation for three
and nine months  ending  September 30, 2003 reflects the number of shares issued
in the merger.

          ADVERTISING.  The Company  expenses the costs of general  advertising,
promotion and marketing programs at the time the costs are incurred.

          INCOME TAXES. The Company applies the asset and liability  approach to
financial accounting and reporting for income taxes.  Deferred income tax assets
and liabilities are computed for differences between the financial statement and
tax bases of  assets  and  liabilities  that will  result in future  taxable  or
deductible amounts, based on enacted tax laws and rates for the periods in which
the differences are expected to affect taxable income.  Valuation allowances are
established,  when  necessary,  to reduce  deferred  tax  assets  to the  amount
expected to be realized.
                                       9



          USE  OF  ESTIMATES.   The  preparation  of  financial   statements  in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make estimates and assumptions  that affect the
reported  amounts of assets and liabilities and disclosure of contingent  assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses  during the  reporting  period.  Actual  results  could
differ from those estimates.

          STOCK-BASED COMPENSATION. In December 2002, the FASB issued Statements
of  Financial   Accounting   Standards  No.  148   "Accounting  for  Stock-Based
Compensation--Transition  and  Disclosure--an  amendment of FASB  Statement  No.
123". This Statement amends FASB Statement No. 123,  "Accounting for Stock-Based
Compensation",  to provide  alternative  methods of  transition  for a voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition, this Statement amends the disclosure requirements of
Statement  123 to require  prominent  disclosures  in both  annual  and  interim
financial  statements  about the method of accounting for  stock-based  employee
compensation  and the effect of the method used on reported  results.  Effective
January 1, 2003 the Company  adopted  this  standard  and reports the fair value
recognition provisions on a prospective basis.

          RECLASSIFICATIONS. Certain prior period amounts have been reclassified
to conform to the current period presentation.

                                       10




NOTE C. PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

          The following  unaudited  pro-forma  statement of operations  presents
information  as if the merger,  purchase of the property and  equipment  and the
issuance  of the senior  convertible  notes  took place at January 1, 2003.  The
pro-forma  amounts  include  certain  adjustments  primarily to present  certain
expenses which resulted from the  transaction  and do not reflect the economics,
if any,  which  might be  achieved  from  combining  the  Company's  results  of
operations.   The  merger  was  between   companies  under  common  control  and
accordingly assets and liabilities acquired were recorded at book value.

          The unaudited pro forma financial  statements  should be read together
with the  financial  statements  and notes of the Company  and the  consolidated
financial statements of CDL for the year ended December 31, 2003.

                                                                       PRO FORMA RESULTS
                                                                           (UNAUDITED)
                                                               (IN THOUSANDS EXCEPT PER SHARE DATA)

                                                             THREE MONTHS ENDED     NINE MONTHS ENDED
                                                              SEPTEMBER 30, 2003   SEPTEMBER 30, 2003

Revenues                                                            $  2,641              $  7,473
                                                                    --------              --------

Expenses:
     Operating costs                                                   1,488                 4,209
     Selling, general and administrative                               3,170                 9,238
     Depreciation                                                        178                   526
     Interest expense, net                                               893                 3,234
                                                                    --------              --------
       Total expenses                                                  5,729                17,207
                                                                    --------              --------
Other income
     Gain on sale of investment and related management contract           --                   135
     Recovery of insurance proceeds                                       --                   500
     Gain on extinguishment of debt                                       --                   389
                                                                    --------              --------
            Total other income                                            --                 1,024
                                                                    --------              --------

Net loss                                                              (3,088)               (8,710)

Cumulative undeclared dividends
     On preferred stock                                                  391                 1,161
                                                                    --------              --------
Net loss applicable to common shares                                $ (3,479)             $ (9,871)
                                                                    ========              ========

Weighted average common shares
     outstanding, basic and diluted                                   23,995                23,570
                                                                    ========              ========
Loss per common share, basic and diluted                            $  (0.14)             $  (0.42)
                                                                    ========              ========

                                       11




NOTE D. PROPERTY AND EQUIPMENT

                                                                (IN THOUSANDS)
                                                              September 30, 2004

              Land                                               $     770
              Land improvements                                         57
              Buildings                                              4,505
              Buildings improvements                                23,709
              Vehicles                                                 129
              Furniture, fixtures and equipment                      2,630
                                                                 ---------

                                                                    31,800

              Less - Accumulated depreciation and amortization        (336)
                                                                 ---------

                                                                   $31,464
                                                                 =========

          Depreciation and amortization  expense was approximately  $316,000 and
$178,000, respectively, for the three months ending September 30, 2004 and 2003,
and approximately $336,000 and $526,000, respectively, for the nine months ended
September 30, 2004 and 2003.

NOTE E.  ADVANCES TO TRIBAL GAMING AUTHORITIES

          The Company has made  payments to both the Cayuga Nation and the Tribe
to help cover  development  costs for the proposed  gaming  facilities and other
development projects.  These advances are refundable under certain circumstances
and are  non-interest-bearing.  As of September 30, 2004, approximately $540,000
in total was advanced to both Tribal Gaming Authorities.

NOTE F.  DEFERRED DEVELOPMENT COSTS

          Under a special  letter  agreement  between the Company and the Cayuga
Nation,  the parties are to work exclusively with each other to develop a casino
in  Sullivan  County,  New  York  and,  as  an  inducement  to  enter  into  the
transaction,  the Cayuga Nation received  300,000 shares of the Company's common
stock  vesting over a twelve month  period.  On April 9 and October 9, 2003,  an
aggregate  of 200,000  shares of common stock vested at a market value of $10.56
and $13.84 per share,  respectively.  On April 9, 2004,  an  additional  100,000
shares vested and approximately $1.5 million of additional cost was capitalized.
When the operations of the proposed casino  commence,  the deferred  development
costs  will be  systematically  recognized  over a  determinable  period.  These
capitalized costs are periodically reviewed for impairment.

NOTE G.  GAMING LICENSE AND DEVELOPMENT COSTS

          In  connection  with the  development  of real  estate for  additional
gaming  activities,  the Company has incurred  various costs. As of December 31,
2003, Monticello Raceway Development, through CDL, had capitalized approximately
$4.2  million.  During the nine months  ended  September  30,  2004,  Monticello
Raceway Development capitalized  approximately $2.1 million of additional costs.
Capitalized costs that are specifically related to either of the Native American
projects    are    refundable    under    certain    circumstances    and    are
non-interest-bearing. When the financing of the relevant operation is completed,
the gaming license and  development  costs will be evaluated for refund ability,
and when the  operations of the proposed  casino  commence the balance,  if any,
will be systematically  recognized over a determinable period. These capitalized
costs are periodically reviewed for impairment.

NOTE H. SENIOR CONVERTIBLE NOTES

          On July 23,  2004,  the  Company  issued $65  million  of 5.5%  senior
convertible notes presently convertible into approximately 4.7 million shares of
common stock,  subject to adjustment  upon the occurrence or  non-occurrence  of
certain  events.  The notes were issued with a maturity  date of July 31,  2014.
Interest is payable  semi-annually  on January 31 and July 31 to the persons who
are  registered  holders at the close of business on each January 15 and July 15
immediately preceding the applicable interest payment date.
                                       12


          The senior  convertible  notes are the Company's  senior  obligations,
ranking  senior in right of payment to all of the Company's  existing and future
subordinated  indebtedness and ranking equally in right of payment with existing
and future senior  indebtedness.  The notes are  guaranteed on a senior basis by
all of the  Company's  material  subsidiaries.  The  guarantee of each  material
subsidiary guarantor is a senior obligation of the guarantor,  ranking senior in
right of payment to all existing  and future  subordinated  indebtedness  of the
Company's  guarantors and ranking  equally in right of payment with any existing
and future senior indebtedness of such guarantor.

          The notes are secured by the Company's  tangible and intangible assets
and by a  pledge  of the  equity  interests  of each of the  Company's  material
subsidiaries.

          The notes initially  accrue interest at an annual rate of 5.5%. If one
of the following  events (the "Trigger  Event") does not occur on or before July
31, 2005:  publication  in the Federal  Register of approval by the Secretary of
the  Interior  of a Class III gaming  compact  for the Cayuga  Catskill  Resort;
written  approval of a gaming  facility  management  agreement  on behalf of the
chairman of the National  Indian Gaming  Commission;  or the land in Monticello,
New York to be used for the  development  of the Cayuga  Catskill  Resort having
been transferred to the United States in trust for the Cayuga Nation,  the notes
will accrue  interest  from and after July 31, 2005 at an annual rate of 8%. The
interest rate will return to 5.5% upon the occurrence of the Trigger Event.

          The notes can be converted  into shares of the Company's  common stock
at any time prior to maturity,  redemption  or  repurchase  by the Company.  The
initial  conversion  rate is 72.727 shares per each $1,000  principal  amount of
notes,  subject to adjustment.  This conversion rate is equivalent to an initial
conversion  price of $13.75 per share. In the event that the notes convert prior
to July 31, 2007, the Company will be required to make an additional  make-whole
payment  equal to the  present  value of all  remaining  scheduled  payments  of
interest on the notes to be  converted  through  and  including  July 31,  2007,
assuming for such purpose that the interest rate in effect as of the  conversion
date shall apply for all subsequent  interest periods through July 31, 2007. Any
make-whole  payment  will be payable  in cash or, at the  Company's  option,  in
shares of the Company's common stock at a 5% discount to the average closing bid
price  of the  Company's  common  stock  for the 10  trading  days  prior to the
conversion date.

          If the Trigger  Event has not  occurred on or prior to July 31,  2005,
the initial  conversion rate per each $1,000  principal amount of notes shall be
reset  based on a 15%  premium to the  average  closing  bid price of our common
stock for the prior 10 trading  days,  provided,  however,  that the new initial
conversion  rate  shall not  reflect an  initial  conversion  price in excess of
$13.75 or less than $12.56 per share.

          The Company will use its best  efforts to cause,  on or prior to April
22, 2005, if the Trigger  Event shall have not yet  occurred,  the notes and the
guarantees  to  become  secured  by a  mortgage  on our  232  acres  of  land in
Monticello, New York (with such mortgage being released with respect to the site
of the Cayuga  Catskill  Resort being released as required to transfer such site
into trust with the United States).

          Upon the occurrence of the Trigger Event, the indenture  governing the
notes will permit the  Company to incur up to an  additional  $150.0  million of
additional  indebtedness  or any  amount  of  additional  indebtedness  that the
Company's  consolidated fixed charge coverage ratio will be, after giving effect
to the incurrence thereof, greater than 2 to 1.

          If the Company experiences a significant change of control, the holder
will have the right to either  require the Company to repurchase  the notes at a
price equal to 101% of the  principal  amount  thereof,  plus accrued and unpaid
interest and liquidated  damages,  if any, thereon or, in the event at least 90%
of the  consideration  received  in  connection  with such  change of control is
comprised of cash or cash equivalents,  elect to receive a make-whole payment of
up to 16.5% of the  outstanding  principal  amount of such  holder's  untendered
notes (depending when the change of control occurs).

          Holders may require the Company to purchase all or part of their notes
at a purchase  price of 100% of the  principal  amount of the notes plus accrued
and unpaid interest and liquidated damages, if any, on July 1, 2009.

          The notes were sold by the initial  purchaser  in a Rule 144A  private
offering to qualified  institutional  buyers and were not  registered  under the
Securities  Act of 1933.  In September of 2004, a shelf  registration  statement
covering  the resale of the notes and the shares of common stock  issuable  upon
conversion  of the  notes  was  filed  with  the SEC and  subsequently  declared
effective on October 4, 2004.

          There is no  public  market  for the notes  and the  Company  does not
intend  to apply for  listing  of the notes on any  securities  exchange  or for
quotation of the notes through any automated quotation system.

          The  Company,   in  association   with  the  issuance  of  the  senior
convertible  notes,  incurred  approximately $3.1 million in costs. The deferred
financing  costs will be capitalized  and  systematically  amortized over the 10
year life of the notes.  For the three months  ended  September  30,  2004,  the
Company recognized approximately $56,000 in amortization expense.

          For the three months ended September 30, 2004, the Company  recognized
approximately   $645,000  in  interest   expense   associated  with  the  senior
convertible notes.
                                       13



          On January 31, 2005, the interest  payment due in association with the
senior convertible notes will be approximately $1.8 million.

NOTE I.  NOTES PAYABLE

Bryanston Group and Beatrice Tollman

          On January 9, 2004, the Company  redeemed  2,392,857  shares of common
stock at a  redemption  price of $2.12 per share.  In order to  consummate  this
redemption, the Company issued promissory notes in the sum of approximately $5.1
million.  On July 26,  2004,  approximately  $5.3  million of proceeds  from the
senior  convertible notes was expended to pay in full the principal of the notes
and accrued interest to Bryanston Group and Beatrice Tollman.

          Under the terms of the  notes,  interest  accrued  on the  outstanding
principal  amount at the rate of 7% per  annum.  For the  three and nine  months
ended  September  30,  2004 the  Company  recognized  approximately  $26,000 and
$195,000 respectively, in interest expense associated with the promissory notes.

Berkshire Bank

          On October 29, 2003, Monticello Raceway Management issued a $3,500,000
note to The Berkshire Bank. The Company entered into a surety agreement with The
Berkshire  Bank to guarantee the note.  The note was  subsequently  satisfied in
February 2004.

NOTE J. STOCK AND STOCK OPTION TRANSACTIONS

          In  accordance  with the merger  agreement,  18,219,075  shares of our
common  stock were issued  pursuant to our  acquisition  of  Monticello  Raceway
Management,  Monticello Casino Management,  Monticello  Raceway  Development and
Mohawk  Management,  LLC,  all of which may be sold to the public  pursuant to a
registration  statement  under the  Securities  Act. On  February  2, 2004,  the
Company also issued 4,050,000  shares of our common stock to multiple  investors
in a private  placement.  At  September  30, 2004,  the Company has  outstanding
options to purchase  approximately  965,000 shares of common stock at an average
exercise  price of $4.81 per share and 250,000  warrants at an exercise price of
$7.50 per warrant.

          On January 30,  2004,  David  Matheson,  the  Chairman of the Board of
Directors of the Company,  was granted  20,000  shares of the  Company's  common
stock  for  his  service  on a  special  committee  of the  Board  of  Directors
established to represent the Company with the regulatory matters in front of the
Bureau of Indian Affairs, the National Indian Gaming Commission and the State of
New  York  with  respect  to the  Cayuga  Nation  gaming  project.  The  expense
associated with this grant was approximately  $260,000 and was recognized in the
period  ending March 31,  2004.  On June 30, 2004,  another  20,000  shares were
issued to Mr.  Matheson  for these  services  and were  recorded  in the  second
quarter,  and the expense associated with this grant was $281,000.  Mr. Matheson
abstained  from all votes of the Board of  Directors  related to the creation of
this special committee and the establishment of his compensation.

          On April 29, 2004,  the Company in settlement of all unpaid  dividends
from the first  quarter  of 2004,  due April 1, 2004 on the  Series B  Preferred
shares, paid $30,000 in cash. On June 11, 2004, the Company issued 16,074 shares
of common stock in settlement of all outstanding  dividends from the year ending
December 31, 2003. The 16,074 shares were valued at  approximately  $210,000 and
recorded in the quarter ended June 30, 2004.


          On May 20, 2004, the Company issued  109,500  incentive  stock options
with a strike price of $14.25 to various employees. The option issuance provided
a  variety  of  vesting  schedules,  including  half  immediately  and  half the
following  year,  33.3%  each  year over  three  years  starting  at the date of
issuance  and,  33.3% each year over three years  starting  after one year.  All
options expire ten years from the date of grant.  On the date of issuance 33,333
options were vested and the expense recognized. The expense associated with this
grant was approximately $210,000 in the quarter ending September 30, 2004.

          On August 13, 2004, the Company issued 20,000  incentive stock options
with a strike price of $8.63 to various employees.  The option issuance provided
for the following vesting schedules,  (i) 33.3% vested  immediately,  (ii) 33.3%
vested  over a year,  and (iii) the balance  vested over two years.  All options
expire ten years from the date of grant.  On the date of issuance  6,667 options
were vested and the expense was  recognized.  The expense  associated  with this
grant was approximately $69,000 in the quarter ending September 30, 2004.

          During the nine months ended September 30, 2004, the Company  received
approximately $119,000 of proceeds from the exercising of stock options.


                                       14




NOTE K. INCOME TAXES

          The Company and all of its  subsidiaries  file a consolidated  federal
income tax return. At December 31, 2003, the estimated Company's deferred income
tax asset was comprised of the tax benefit  associated  with the following items
based on the statutory tax rates currently in effect:

                                                    (in thousands)
                  Net operating loss
                        Carry forwards               $ 67,000
                                                     ========
                  Deferred income tax asset          $ 26,800
                        Valuation allowance           (26,800)
                                                     --------
                  Deferred income tax asset, net     $     --
                                                     ========


          The Company's merger with CDL will limit the Company's  ability to use
its current net operating loss carry forwards, potentially increasing future tax
liability.  As of December 31, 2003,  the Company had net  operating  loss carry
forwards of  approximately  $67 million that expire  between 2008 and 2023.  The
Internal  Revenue  Code  allows  the  offset of these net  operating  loss carry
forwards against income earned in future years,  thus reducing the tax liability
in future years. The merger of the Company's operations with CDL, however,  will
not permit the Company to use the entire amount of the net operating  losses due
to the change in control of the Company.  A limited  amount of the net operating
loss  carry-forward  may be  applied  in future  years  based upon the change of
control and existing income tax laws.

                                       15




NOTE L. SUPPLEMENTAL GUARANTOR INFORMATION

          As  discussed  in Note H, the Company  obligations  to pay  principal,
premium,  if any, and interest  under certain debt are guaranteed on a joint and
several basis by substantially all of its operating subsidiaries. The guarantees
are full and unconditional and the guarantor  subsidiaries are 100% owned by the
Company. The Company has determined that separate,  full financial statements of
the   guarantors,   Monticello   Raceway   Management  and  Monticello   Raceway
Development,  would not be material to investors and, accordingly,  supplemental
financial information for the guarantors is presented.

EMPIRE RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2004
(UNAUDITED)
(IN THOUSANDS)

ASSETS                                                EMPIRE     GUARANTOR      NON-GUARANTOR  ELIMINATING    CONSOLIDATED
                                                      RESORTS    SUBSIDIARIES   SUBSIDIARIES     ENTRIES         EMPIRE

Cash and cash equivalents                          $   8,830     $   5,360      $      --      $      --      $  14,190
Restricted cash                                           --           115             --             --            115
Accounts receivable                                       --           779             --             --            779
Prepaid expenses and other assets                        205           892             --             --          1,097
Investments in subsidiaries                            5,060            --             --         (5,060)            --
Inter-Company                                        140,407            --             --       (140,407)            --
Property and equipment, net                               --        31,464             --             --         31,464
Advances- Tribal Gaming Authorities                       --           540             --             --            540
Deferred financing costs, net                          3,040            --             --             --          3,040
Deferred development costs                                --         3,890             --             --          3,890
Gaming license and development costs                      --         6,252             --             --          6,252
                                                   ---------     ---------      ---------      ---------      ---------

TOTAL ASSETS                                       $ 157,542     $  49,292      $      --      $(145,467)     $  61,367
                                                   =========     =========      =========      =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Accounts payable                                   $   1,384     $   1,611      $      --      $      --      $   2,995
Construction costs payable                                --         2,714             --             --          2,714
Accrued expenses and other liabilities                   797         2,683             --             --          3,480
Inter-Company                                             --        46,825         93,582       (140,407)            --
Senior convertible notes                              65,000            --             --             --         65,000
                                                   ---------     ---------      ---------      ---------      ---------
    Total liabilities                                 67,181        53,833         93,582       (140,407)        74,189

Stockholders' Equity (Deficit):                       90,361        (4,541)       (93,582)        (5,060)       (12,822)
                                                   ---------     ---------      ---------      ---------      ---------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)                     $ 157,542     $  49,292      $      --      $(145,467)     $  61,367
                                                   =========     =========      =========      =========      =========


                                       16




EMPIRE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED)
(IN THOUSANDS)

                                                EMPIRE        GUARANTOR     NON-GUARANTOR     ELIMINATING      CONSOLIDATED
                                                RESORTS       SUBSIDIARIES  SUBSIDIARIES      ENTRIES          EMPIRE

REVENUES                                        $     --      $ 21,914      $          --     $          --    $ 21,914
                                                --------      --------      -------------     -------------    --------
EXPENSES:
   Operating costs                                    --        20,789                 --                --      20,789
   Selling, general and administrative             1,025           663                 --                --       1,688
   Depreciation and amortization                      --           316                 --                --         316
   Amortization of deferred financing costs           56            --                 --                --          56
   Intercompany interest (income) expense           (951)          951                 --                --          --
   Interest expense, net                             639           (41)                --                --         598
                                                --------      --------      -------------     -------------    --------

   Total expenses                                    769        22,678                 --                --      23,447
                                                --------      --------      -------------     -------------    --------
NET LOSS                                        $   (769)     $   (764)     $          --     $          --    $ (1,533)
                                                ========      ========      =============     =============    ========


EMPIRE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED)
(IN THOUSANDS)

                                          EMPIRE            GUARANTOR    NON-GUARANTOR     ELIMINATING      CONSOLIDATED
                                          RESORTS           SUBSIDIARIES SUBSIDIARIES      ENTRIES          EMPIRE

REVENUES                                  $          --     $ 2,641      $          --     $          --    $ 2,641
                                          -------------     -------      -------------     -------------    -------
EXPENSES:
   Operating costs                                   --       1,488                 --                --      1,488
   Selling general and administrative                --         956                 --                --        956
   Depreciation and amortization                     --         178                 --                --        178
   Interest expense, net                             --         166                 --                --        166
                                          -------------     -------      -------------     -------------    -------
   Total expenses                                    --       2,788                 --                --      2,788
                                          -------------     -------      -------------     -------------    -------
NET LOSS                                  $          --     $  (147)     $          --     $          --    $  (147)
                                          =============     =======      =============     =============    =======


                                       17




EMPIRE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED)
(IN THOUSANDS)

                                                EMPIRE        GUARANTOR     NON-GUARANTOR     ELIMINATING      CONSOLIDATED
                                                RESORTS       SUBSIDIARIES  SUBSIDIARIES      ENTRIES          EMPIRE

REVENUE                                         $     --      $ 27,079      $          --     $          --    $ 27,079
                                                --------      --------      -------------     -------------    --------
EXPENSES:
   Operating costs                                    --        27,645                 --                --      27,645
   Selling general and administrative              5,420         2,320                 --                --       7,740
   Depreciation and amortization                      --           336                 --                --         336
   Amortization of deferred financing costs           56           244                 --                --         300
   Intercompany interest (income) expense           (951)          951                 --                --          --
   Interest expense, net                             746           124                 --                --         870
                                                --------      --------      -------------     -------------    --------

   Total expenses                                  5,271        31,620                 --                --      36,891
                                                --------      --------      -------------     -------------    --------

NET LOSS                                        $ (5,271)     $ (4,541)     $          --     $          --    $ (9,812)
                                                ========      ========      =============     =============    ========


EMPIRE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED)
(IN THOUSANDS)

                                          EMPIRE            GUARANTOR    NON-GUARANTOR     ELIMINATING      CONSOLIDATED
                                          RESORTS           SUBSIDIARIES SUBSIDIARIES        ENTRIES           EMPIRE

REVENUE                                   $          --     $ 7,473      $          --     $          --    $ 7,473
                                          -------------     -------      -------------     -------------    -------
EXPENSES:
   Operating costs                                   --       4,209                 --                --      4,209
   Selling general and administrative                --       3,764                 --                --      3,764
   Depreciation and amortization                     --         526                 --                --        526
   Interest expense, net                             --         497                 --                --        497
                                          -------------     -------      -------------     -------------    -------

   Total expenses                                    --       8,996                 --                --      8,996
                                          -------------     -------      -------------     -------------    -------
NET LOSS                                  $          --     $(1,523)     $          --     $          --    $(1,523)
                                          =============     =======      =============     =============    =======


                                       18




EMPIRE RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2004
(UNAUDITED)
(IN THOUSANDS)

                                              EMPIRE        GUARANTOR     NON-GUARANTOR     ELIMINATING   CONSOLIDATED
                                              RESORTS       SUBSIDIARIES  SUBSIDIARIES        ENTRIES       EMPIRE

Net cash used in operating activities         $ (2,518)     $ (5,147)     $          --     $     --      $ (7,665)
                                              --------      --------      -------------     --------      --------

Cash flows from investing activities:
   Purchases of property and equipment              --       (27,959)                --           --       (27,959)
   Cash acquired from acquisition                   18            --                 --           --            18
   Advances- Tribal Gaming Authorities              --          (155)                --           --          (155)
   Gaming license and development costs             --        (2,086)                             --        (2,086)
   Advances to subsidiaries                    (42,823)           --                 --       42,823            --
                                              --------      --------      -------------     --------      --------

Net cash used in investing activities          (42,805)      (30,200)                --       42,823       (30,182)
                                              --------      --------      -------------     --------      --------

Cash flows from financing activities:
   Proceeds from sale of stock                  30,375            --                 --           --        30,375
   Proceeds from exercise of
           stock options and warrants              119            --                 --           --           119
   Stock issuance expenses                      (2,317)           --                 --           --        (2,317)
   Proceeds from issuance of senior
          convertible notes                     62,218            --                 --           --        62,218
   Excess of market value over carrying
          value of property and
           equipment purchased                 (30,825)           --                 --           --       (30,825)
   Advances from Empire Resorts                     --        42,823                 --      (42,823)
   Repayment of promissory notes                (5,073)           --                 --           --        (5,073)
   Repayment of note payable, bank                  --        (3,470)                --           --        (3,470)
   Deferred financing costs                       (314)           --                 --           --          (314)
   Preferred stock dividends paid                  (30)           --                 --           --           (30)
                                              --------      --------      -------------     --------      --------

Net cash provided by financing activities       54,153        39,353                 --      (42,823)       50,683
                                              --------      --------      -------------     --------      --------

Net increase in cash and cash equivalents        8,830         4,006                 --           --        12,836

Cash and cash equivalents,
           beginning of period                      --         1,354                 --           --         1,354
                                              --------      --------      -------------     --------      --------

Cash and cash equivalents,
           end of period                      $  8,830      $  5,360      $          --     $     --      $ 14,190
                                              ========      ========      =============     ========      ========


                                       19




EMPIRE RESORTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003
(UNAUDITED)
(IN THOUSANDS)

                                              EMPIRE             GUARANTOR    NON-GUARANTOR     ELIMINATING     CONSOLIDATED
                                              RESORTS            SUBSIDIARIES SUBSIDIARIES         ENTRIES         EMPIRE

Net cash provided by operating activities     $           --     $   954      $           --    $           --   $   954
                                              --------------     -------      --------------    --------------   -----------

Cash flows from investing activities:
   Purchases of property and equipment                    --        (526)                 --                --      (526)
   Gaming license and development costs                   --      (1,577)                 --                --    (1,577)
                                              --------------     -------      --------------    --------------   -----------

Net cash used in investing activities                     --      (2,103)                 --                --    (2,103)
                                              --------------     -------      --------------    --------------   -----------

Cash flows from financing activities:
   Members' capital contributions                         --       1,314                  --                --     1,314
                                              --------------     -------      --------------    --------------   -----------

Net increase in cash and cash equivalents                 --         165                  --                --       165

Cash and cash equivalents,
           beginning of period                            --         644                  --                --       644
                                              --------------     -------      --------------    --------------   -----------

Cash and cash equivalents,
              end of period                   $           --     $   809      $           --    $           --   $   809
                                              ==============     =======      ==============    ==============   ===========


                                       20


Note M. Related Party Transactions

          On October 29, 2003,  CDL, a related  party,  and  Monticello  Raceway
Management  entered into a 48-year Ground Lease ("Ground Lease") with respect to
232 acres of land and the improvements  located on such land. Under the terms of
the Ground Lease,  Monticello  Raceway Management agreed to pay CDL $1.8 million
per year, with the first payment deferrable until January 11, 2005, but accruing
interest  at the rate of 4.5% per annum.  On July 26,  2004,  approximately  $38
million of proceeds from the senior  convertible notes was expended to terminate
the Ground  Lease and  acquire  the fee  interest in these 232 acres from CDL, a
related party.  The property and equipment was recorded at CDL's carrying value.
The  purchase  provides  for  additional  security  to the holders of the senior
convertible notes and will allow the Company to benefit from certain real estate
tax credits resulting from its recent investment in improvements on the land.

NOTE N. COMMITMENTS AND CONTINGENCIES

          CASINO  DEVELOPMENT.  On August 19,  2004,  the Tribe and the  Company
entered into a one year agreement in which the Company agreed to provide $35,000
per month to pay the expenses of  establishing  the tribal  gaming  authority or
similar  organization  to  oversee  its  gaming  activities  and  other  related
purposes.

          CONSTRUCTION  OBLIGATION.  To prepare the  property at the Raceway for
the  VGM  operation,   the  Company  had  contractual  obligations  relating  to
construction of the VGM  renovations of  approximately  $21 million.  The unpaid
balance of the original contract was approximately $2.5 million at September 30,
2004. On November 9, 2004 this obligation was paid in full.

          LITIGATION TRUST. On January 12, 2004, in order to better focus on the
development  of a VGM program at the Raceway and current  business  arrangements
with the Cayuga Nation and as a condition to the consolidation  transaction with
CDL, all  interests of the  plaintiffs,  including  any interest of the Company,
with respect to  litigation  against  Caesars  Entertainment,  Inc which alleged
tortuous  interference  with  contractual  and  business   relationships,   were
transferred to a liquidating litigation trust. The Company agreed to provide the
litigation trust with a $2.5 million line of credit.  For the nine months ending
September 30, 2004, the Company advanced  approximately $250,000 in draws on the
line of  credit.  Due to the  unpredictable  nature  of the  litigation  and the
pending  motions  currently under review,  the Company  provided for a valuation
allowance of  approximately  $250,000 against the receivable from the litigation
trust.

          LEGAL PROCEEDINGS. The Monticello Harness Horsemen's Association, Inc.
("Horsemen",  "Horsemen's  Association")  has brought  multiple  actions against
Monticello Raceway Management and an officer of the Company.

          One of the actions seeks the sum of  approximately  $1.6 million to be
credited  to the  Horsemen's  purse  account,  and an  additional  $4 million in
punitive  damages.  Another case is questioning a racing series that purportedly
violated  the  contract  with  Monticello  Raceway  Management.  Management  has
responded  vigorously  to contest  the cases after  attempts at an  out-of-court
settlement proved fruitless.

          Another action that seeks monetary damages of approximately  $500,000,
claims that certain monies  (approximately  $80,000) which should have been used
solely for "overnight  purses" were expended by the Raceway for a special racing
series known as the William  Sullivan  Pacing  Series,  that  management has not
increased  purses to the  Horsemen  for  overnight  racing as  requested  by the
Horsemen and that management is improperly holding up approximately  $400,000 in
an account that is earmarked for payment of purses until such time as management
deems it appropriate.  Another action seeks approximately $2 million in damages,
claiming that management has withheld various simulcasting and OTB revenues from
the  Horsemen's  purse account and deducted  various  unauthorized  simulcasting
expenses.  Management has responded  vigorously to this  litigation,  and at the
same time will seek,  if  possible,  to resolve  these  issues in the context of
contract  negotiations with the Horsemen's  Association that are ongoing.  There
are sharply  disputed facts with regard to the cause of action seeking a greater
share of the simulcasting  revenue, and at this time no estimate can be given of
the outcome of this cause of action or the amount of potential loss.

          Another  action by the  Horsemen's  Association  sought an  injunction
preventing management from consolidating the barn area by removing approximately
50% of the barns and moving the Horsemen to different barns and also seeks money
damages for such conduct. A temporary  restraining order at the inception of the
case was vacated after a hearing,  and the decision of management to consolidate
the barn area and deny stall space to certain  Horsemen  was upheld by the Court
on the injunction motion. There is further discovery pending.
                                       21



          The Company's  ability to  participate in New York's VGM program or to
help develop and manage a Native American casino in conjunction  with the Cayuga
Nation of New York could be hampered  by the  outcome of two  pending  lawsuits,
Dalton v. Pataki and Karr v.  Pataki,  that seek to enjoin the State of New York
from proceeding  with the VGM program or permitting the  construction of any new
Native American casinos within the State of New York's borders.  While the trial
court  dismissed both of these cases in May 2003,  the plaintiffs  have filed an
appeal.  On July 7, 2004,  the Appellate  Division of the New York State Supreme
Court  affirmed the decision of lower court to uphold the  constitutionality  of
the provisions of the law that authorized expanded Native American casino gaming
in New York State and found  that it was  consistent  with New York and  federal
laws. The Appellate  Division also ruled that the legislation  permitting  state
sponsored  VGM  operations is  unconstitutional  under New York law because such
legislation  provides  that a portion of the VGM  vendor  fees be  dedicated  to
breeding  funds and enhancing  purses in violation of a  constitutional  mandate
that such moneys be applied  exclusively to, or in aid or support of,  education
in the State of New York. The Attorney  General of the State of New York filed a
notice of appeal  with  respect  to this  ruling  that  automatically  stays the
decision of the  appellate  court and allows the  Company to continue  operating
VGM's at the Raceway.  However,  there can be no assurance that the State of New
York will ultimately prevail or, alternatively, that the authorizing legislation
will be amended in order for it to be  constitutional.  If the appellate court's
findings  are  ultimately  upheld  and the  state  legislature  fails  to  enact
corrective legislation, the Company would be forced to close its VGM operations.

          The  Company  is  also a  party  to  various  non-environmental  legal
proceedings and administrative  actions, all arising from the ordinary course of
business.  Although  it is  impossible  to  predict  the  outcome  of any  legal
proceeding,  the Company  believes any liability  that may finally be determined
with respect to such legal proceedings  should not have a material effect on the
Company's consolidated financial position, results of operations or cash flows.

NOTE O. SUBSEQUENT EVENTS

          On November 12,  2004,  the Company  entered into a binding  agreement
with Concord Associates Limited  Partnership and an affiliate for acquisition of
the Concord and  Grossinger's  Resort Hotels and Golf Courses.  The  acquisition
includes  casino  and  hotel  development  sites,  and a 72  hole  golf  course,
including the Monster, International,  Challenger and Grossinger's Golf Courses.
Concord Associates  Limited  Partnership is a joint venture owned 46% by Reckson
Strategic Venture Partners, a real estate venture capital fund.

          As  consideration  for the  acquisition,  the  Company  will  issue 18
million  shares of  common  stock to  Concord  Associates  Limited  Partnership,
representing  approximately  40% of the total  number of issued and  outstanding
common shares of the Company after the closing, on a fully diluted basis and the
assumption  of related  debt.  The  closing  is  subject  to certain  approvals,
including  a vote in favor of the  transaction  by a majority  of the  Company's
shareholders, and regulatory approval of at least one land to trust transfer for
a gaming facility at any of the casino development sites owned by the Company or
Concord Associates Limited Partnership.

          On November  12, 2004,  the State of New York and the Tribe  announced
execution  of a  settlement  agreement  relating to the Tribe's  land claims and
development of a Native  American  casino to be located in the Town of Thompson,
Sullivan  County.  The  agreement  provides that the State and Tribe shall enter
into a mutually satisfactory Class III gaming compact to operate a casino in the
Catskills,  subject to approval of the  Secretary of  Interior.  The Company has
urged the State and the Cayuga Nation to pursue a similar  settlement  agreement
prior to December  31, 2004,  on which date the  Company's  agreements  with the
Cayuga Nation terminate.

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

          The  Management's  Discussion and Analysis of the Financial  Condition
and  Results  of  Operations  should  be read  together  with  the  Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated  Financial Statements in the Company's Annual Report on Form 10-KSB
for the fiscal  year ended  December  31,  2003 filed by the  Company  under the
Securities Exchange Act of 1934.


FORWARD-LOOKING STATEMENTS

          This  Quarterly  Report  on  Form  10-QSB  contains  statements  which
constitute  forward-looking  statements within the meaning of Section 27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act of 1934, as amended.  These  forward-looking  statements generally relate to
our  strategies,  plans and objectives for future  operations and are based upon
management's current plans and beliefs or estimates of future results or trends.
Forward-looking  statements  also involve risks and  uncertainties,  which could
cause  actual  results  to  differ   materially  from  those  contained  in  any
forward-looking  statement.  Many of these  factors  are beyond  our  ability to
control or predict.

          You should not place undue reliance on any forward-looking statements,
which are based on current  expectations.  Further,  forward-looking  statements
speak  only  as of the  date  they  are  made,  and we  will  not  update  these
forward-looking statements, even if our situation changes in the future.


OVERVIEW

          Empire Resorts, Inc. ("Empire Resorts" or the "Company") was organized
as a Delaware corporation on March 19, 1993, and since that time has served as a
holding company for various subsidiaries  engaged in the ownership,  development
and operation of gaming and amusement industries. We were incorporated under the
name Alpha  Hospitality  Corporation  and changed our name to Empire  Resorts in
May, 2003. For much of our history,  we concentrated on riverboat casinos in the
southern United States,  with nominal  holdings in the Mid-Atlantic  States.  In
2002 this focus shifted.  Specifically,  we commenced the  liquidation of all of
our holdings  outside the Catskills  region of the State of New York. By the end
of 2003, we had no direct  operations or meaningful assets other than a minority
interest in Catskill Development,  L.L.C. ("CDL"),  prior owner of approximately
232 acres of land in Monticello,  New York,  the sole  stockholder of Monticello
Raceway Management and the controlling member of Monticello Casino Management.

                                       22


          In  January  2004,  we  acquired  from  the  members  of both  CDL and
Monticello Raceway Development all of the outstanding  membership  interests and
capital stock of Monticello  Raceway  Management,  Monticello Casino Management,
Monticello Raceway Development and Mohawk Management, LLC in exchange for 80.25%
of our common stock,  18,219,075  shares,  calculated  on a  post-consolidation,
fully  diluted  basis.   Monticello   Raceway   Management,   Monticello  Casino
Management, Monticello Raceway Development and Mohawk Management, LLC own all of
the development  and management  rights with respect to a Native American casino
to be developed on 29 of the 232 acres of land in Monticello,  New York owned by
the  Company.  Monticello  Raceway  Management,  which  had  previously  held  a
leasehold  interest in the property,  purchased the property from CDL, a related
party on July 26, 2004.

          Since  we had no  significant  operations  during  the  time  of  this
acquisition  and  the  members  of  CDL  and  Monticello  Raceway   Development,
collectively,  received a controlling interest as part of this acquisition,  the
acquisition  was accounted  for as a reverse  merger.  Moreover,  our ability to
develop a successful  business is now solely dependent on the success or failure
of our  ability  to develop  our  interests  in  Monticello,  New York,  and our
financial results in the future will be based on different activities than those
from our prior fiscal years.

          We now operate  Monticello  Raceway,  a harness horse racing  facility
located in  Monticello,  New York, 90 miles  Northwest of New York City. On June
30, 2004, we began video gaming machine ("VGM")  operations  after completing an
approximately $27 million  renovation of our facility and installing 1,744 VGMs.
We also have agreements with the Cayuga Nation of New York (the "Cayuga Nation")
to develop and manage a Native  American  casino  entitled  the Cayuga  Catskill
Resort adjacent to the Raceway, and an agreement with the Seneca-Cayuga Tribe of
Oklahoma (the "Tribe") a federally  recognized  Indian Tribe to develop a gaming
facility in the Catskills region of New York.

          We have  spent  significant  amounts  of money  generated  principally
through  the  issuance  of equity and debt in  connection  with our  development
activities, primarily for the design, development, financing and construction of
the  video  gaming  operation,  as  well  as  the  predevelopment,  design,  and
negotiations  of two  Native  American  casinos.  Predevelopment  costs  include
expenses  associated  with  legal  fees,  accounting  and  audit  fees and costs
relating to employees.  Some of these costs have been  capitalized.  The Company
periodically  reviews these  capitalized  costs for  impairment.  If such review
shows that the assets are impaired  the  carrying  value will be reduced to fair
value.

          The  results  of our VGM  operations  to date have been  significantly
below expectations.  After only three months of operations,  our start up period
is still in  progress.  However,  the  results  to date have  been  sufficiently
disappointing  that we have made an effort to find areas that might be  improved
on an expedited basis. A number of such areas have been identified,  such as the
product mix of machines on the gaming floor, the need to enhance our program for
bus patrons (which was not commenced until two weeks after opening) and the need
to better balance operating expense with levels of activity.  We have shown some
improvement as a result of these efforts and they are continuing. However, there
are a number of areas where our ability to improve  operations  is limited.  For
example, our product mix is principally determined by the New York State Lottery
Commission after consultations with us and four VGM manufacturers.  Further, the
funds available to us for marketing are limited as the program has been designed
so that New York State Lottery is to be primarily  responsible for marketing for
the program.  To date, the Lottery has not  implemented  an extensive  marketing
effort for the program,  which is still in its early stages.  . Accordingly,  we
are not able at this time to offer  incentives  that compete  favorably with the
Atlantic City and the  Connecticut  Native American  casinos.  The Company and a
coalition of the other  racetracks  authorized to operate VGM's have presented a
comprehensive  bill to certain key members of the New York State  Legislature to
amend  the  split of gross  gaming  revenues  to allow a  significantly  greater
percentage to be retained by the racetracks for operating expenses.  Unless this
proposed amendment,  or one with similar terms is adopted, we may not be able to
bring of our VGM operations to a point of sustaining profitability.

          New  business  developments  or other  unforeseen  events  may  occur,
resulting  in the  need to  raise  additional  funds.  We  continue  to  explore
opportunities  to  develop  additional  gaming or  related  businesses  in other
markets, whether through acquisition or development. Any such developments would
require us to obtain additional financing.

          We have never declared or paid any cash dividends on our common stock.
We  currently  intend to retain our  earnings,  if any,  and cash to finance our
growth and, therefore, do not anticipate paying any cash dividends on our common
stock in the  foreseeable  future.  Any  determination  to pay  dividends in the
future will be at the  discretion of our board of directors and will depend upon
our financial condition, results of operations and capital requirements.

          On July 7, 2004,  the  Appellate  Division of the Supreme Court of the
State of New  York  upheld  the  trial  court's  validation  of the  legislation
authorizing  the Governor of the State of New York to enter into gaming compacts
with federally recognized Native American tribes to provide for Class III gaming
on reservation land within the State of New York. The decision has been appealed
to the highest court of New York,  the Court of Appeals,  which may reverse this
determination by the Appellate Division. In the event of a reversal by the Court
of Appeals,  we may not be able to proceed  with the  development  of the Cayuga
Catskill Resort or any similar projects with the Tribe.

RACEWAY OPERATIONS

          Monticello Raceway  Management,  Inc. a wholly owned subsidiary of the
Company,  is a New  York  corporation  that  operates  Monticello  Raceway  (the
"Raceway"),  a harness horse racing  facility  located in Monticello,  New York.
Monticello Raceway Management held a leasehold interest in the property that the
Raceway is located on, which it purchased  from CDL, a related party on July 26,
2004 by exercising a purchase option under the lease.
                                       23



          The Raceway began  operation in 1958 and offers  pari-mutuel  wagering
and live harness racing throughout the year, along with year round  simulcasting
from various harness and thoroughbred racetracks across the country.  Monticello
Raceway derives its revenue principally from (i) wagering at the Raceway on live
races run at the Raceway;  (ii) fees from wagering at out-of-state  locations on
races  simulcast  from the Raceway  using  export  simulcasting;  (iii)  revenue
allocations,  as  prescribed  by law,  from  betting  activity at New York City,
Nassau County and Catskill Off Track Betting facilities ("OTB") (certain of such
revenues  are shared  with  Yonkers  Raceway  based on a pro rata  market  share
calculation  updated  monthly);  (iv) wagering at the Raceway on races broadcast
from  out-of-state  racetracks using import  simulcasting;  and (v), program and
racing form sales,  the sale of food and beverages  and certain other  ancillary
activities.  The Raceway operation employs approximately 100 employees including
management.  The operating results of the pari-mutuel  operation are reported in
the consolidated  results of Empire Resorts.  The Monticello  Raceway  currently
features:


     o    1,744 VGMs;
     o    live harness horseracing;
     o    year-round simulcast  pari-mutuel wagering on thoroughbred and harness
          horseracing from across the country;
     o    a 5,000-seat  grandstand  and a 100-seat  clubhouse  with  retractable
          windows;
     o    parking spaces for 2,000 cars and 10 buses;
     o    a 350-seat buffet and food court with three outlets;
     o    a  large  central  bar  and  an  additional   clubhouse  bar;  and  an
          entertainment lounge with seating for 75 people.

MIGHTY M GAMING AT MONTICELLO RACEWAY

          A VGM is an  electronic  gaming  device  that  allows a patron to play
electronic  versions  of  various  lottery  games of chance  and is  similar  in
appearance to a traditional slot machine.  On October 31, 2001, the State of New
York enacted a bill  designating  seven  racetracks,  including the Raceway,  to
install and operate VGMs. Under the program,  the New York State Lottery made an
in initial allocation of 1,800 VGMs to the Raceway.  Construction  contracts for
these  facilities  were signed and work on the necessary  improvements  began in
February 2004. On June 30, 2004, we began  operating 1,744 VGMs on 45,000 square
feet of floor space at Monticello  Raceway after  completing  approximately  $24
million of renovations to the facility.  The VGM operation employs approximately
350 employees.  The operating results of the video gaming operation are reported
in the  consolidated  results  of  Empire  Resorts.  Operating  results  for the
pari-mutuel and VGM operations will be evaluated by management separately.

          The primary  competition for Mighty M Gaming at Monticello  Raceway is
from Atlantic City and  Connecticut's  full service  casinos and two  racetracks
located within the New York City metropolitan area, Yonkers Raceway and Aqueduct
Raceway.  Both  racetracks  have announced plans to proceed with the VGM program
and construction of facilities had commenced at Aqueduct Raceway.  However,  the
development program for Yonkers Raceway has yet to be finalized and construction
at both racetracks was suspended pending the resolution of certain legal issues.
In  addition,  proposals  have  been  made for the  implementation  of a similar
program  in New  Jersey,  which  would  include a  facility  at the  Meadowlands
Racetrack. A similar program has recently been authorized in Pennsylvania.

          Two pending  lawsuits,  Dalton v. Pataki and Karr v.  Pataki,  seek to
enjoin the State of New York from  proceeding  with VGM operations or permitting
the  construction  of any new Native  American  casinos  within the State of New
York.  The trial court  initially  dismissed both of these cases in May of 2003.
The plaintiffs filed an appeal of the trial court's dismissal.  On July 7, 2004,
the Appellate  Division of the Supreme Court of the State of New York overturned
the trial court's  dismissal of certain of the plaintiffs'  claims in respect of
VGM  operations.  In overturning the trial court,  the Appellate  Division ruled
that  the   legislation   permitting   state   sponsored   VGM   operations   is
unconstitutional  under New York law because such  legislation  provides  that a
portion of the VGM vendor  fees be  dedicated  to breeding  funds and  enhancing
purses in  violation  of a  constitutional  mandate  that such moneys be applied
exclusively  to, or in aid or support  of,  education  in the State of New York.
Notwithstanding this ruling, the court separately held that VGM are valid, state
operated  lotteries and,  thus,  fall within the exemption of lotteries from the
general  ban on  gambling  in the State of New York.  However,  as the court was
unable to separate  its finding that a VGM is a  legitimate  "lottery"  from the
enacting  legislation  that it believes  unconstitutionally  directs vendor fees
toward  breeding  funds and  enhancing  purses,  the court  held the  entire VGM
legislation to be unconstitutional.

          The office of the Attorney  General of the State of New York has filed
a notice of appeal with respect to the Appellate Division's  invalidation of the
VGM legislation.  This notice of appeal stays the appellate court's ruling while
the State of New York  proceeds to formally  appeal the decision to the New York
Court of Appeals,  New York State's  highest court, a process that we understand
could take 18 months or longer.  While the ruling is stayed,  we can continue to
operate our VGM facility at Monticello  Raceway in a manner consistent with past
practices.  However,  no  assurance  can be given that the Court of Appeals will
overrule  the   Appellate   Division  and  find  the  VGM   legislation   to  be
constitutional.  Absent such a ruling,  to continue VGM operations at Monticello
Raceway,  we  would  need the New  York  state  legislature  to  modify  the VGM
legislation  to  remove  the  provision  that  directs  certain  vendor  fees be
dedicated toward breeding funds and enhancing purses. Again, no assurance can be
given that if the State of New York loses its appeal on the constitutionality of
the VGM  legislation  that the  State of New York  will  subsequently  enact the
required  corrective  legislation.  Should  the  State of New York both lose its
appeal  and  fail to  enact  corrective  legislation,  our  operations  would be
restricted to the operation of  Monticello  Raceway and our proposed  management
and development of a Native American casino.

                                       24




CAYUGA CATSKILL RESORT DEVELOPMENT

          On April 3, 2003, the Cayuga  Nation,  a federally  recognized  Indian
Nation,  CDL and  certain of CDL's  affiliates,  including a  subsidiary  of the
Company,  entered into a series of agreements  which provide for the development
of a trust land casino adjacent to the Raceway.  These  agreements were extended
on June 25, 2004 to December 31, 2004. In furtherance of these transactions,  on
April 10, 2003, these parties  officially filed with the Eastern Regional Office
of the Bureau of Indian Affairs, an application requesting that the Secretary of
the Interior acquire in trust on behalf of the Cayuga Nation a 29 acre parcel of
land in Monticello,  New York to be used for gaming purposes. On April 27, 2004,
the Eastern  Regional  Office  ("ERO") of the Bureau of Indian  Affairs  ("BIA")
completed its review of the plan by the Cayuga Nation and the Company to build a
$500 million casino on a site adjacent to the Raceway.  The ERO recommended that
a finding  be made that the  project  was in the best  interests  of the  Cayuga
Nation and not detrimental to the surrounding community and recommended that the
site  be  taken  into  to  trust  by the  United  States  as a site  for  gaming
activities.

          One of the April 3,  2003  agreements  also  provides  for the  Cayuga
Nation to  participate in the ownership of a  to-be-developed  hotel within five
miles of the proposed gaming facility with the Company.  This agreement  further
provides for a reciprocal  ten-year  option to acquire up to a 33.33%  ownership
interest in the Company's VGM operations, other lodging,  entertainment,  sports
and/or retail  facilities,  which may be developed or operated  within a 15 mile
radius of the proposed  casino.  The option  becomes  exercisable  only upon the
opening date of the gaming facility.

          As  currently  contemplated,  the Cayuga  Catskill  Resort  will be an
approximately  $500 million Class III Native  American gaming project with a Las
Vegas style  casino that is expected to have 3,000 slot  machines  and 200 table
games.  Development of the project is pending various  government  approvals and
financing.

          On June 10, 2004,  the Company  issued a press release  announcing the
Cayuga  Nation  and  the  State  of  New  York  entered  into  a  Memorandum  of
Understanding  (the "MOU")  pursuant to which,  among other things,  the parties
agreed that to help settle the Cayuga  Nation's  outstanding  land claim against
the State of New York,  the State of New York would enter into a gaming  compact
with the Cayuga  Nation  authorizing  the  Cayuga  Nation to operate a Class III
gaming  facility at the Raceway  following  receipt of all  requisite  state and
federal  approvals.  The MOU set a target  date of  September  30,  2004 for the
implementation  of all such necessary  approvals.  The September 30, 2004 target
date under the MOU, however, expired without the implementation of the necessary
approvals.  The Company has been advised by representatives of the Cayuga Nation
that they expect the Company to continue to pursue the objective of the April 3,
2003  agreements  and the Company has been informed of some  continuing  contact
between the Cayuga Nation and the State of New York.  However,  to the knowledge
of the Company,  there are continuing  differences  between the parties in their
efforts to proceed under the MOU.  Moreover,  the most recent  active  proposals
under consideration vary in material respects from the framework outlined in the
MOU. Unless the differences between the parties are resolved expediously,  it is
unlikely that the approvals  contemplated  by the MOU will be achieved  prior to
the expiration of the agreements on December 31, 2004.

          At such time, the Cayuga Nation and the Company will be free to either
renew or modify the current  agreements or to seek other  partners.  The Company
has been and intends to continue to explore  future  development  opportunities,
including  both gaming and non-gaming  resort  development.  These  alternatives
include the  development of Class III gaming  facilities both within and outside
the State of New York, including  discussions with persons owning or controlling
other  locations  within  and  outside  Sullivan  County.  One of the  Company's
existing  agreements  with  the  Cayuga  Nation  contains  broad  language  that
restricts the ability of the parties to hold certain  discussions  pertaining to
development of another Class III gaming  facility  within  Sullivan County until
after December 31, 2004. The Company  intends to respect the purposes and intent
of this agreement,  but deems it prudent to be active in exploring its strategic
alternatives at this time.

          There are two  significant  preconditions  that must be met before the
Cayuga Nation can operate gaming at the Cayuga Catskill Resort.  First, title to
the proposed  29-acre site must be transferred to the United States and accepted
into trust for the benefit of the Cayuga Nation.  Second, the Cayuga Nation must
enter into a Class III gaming compact with the State of New York.

                                       25


OTHER CASINO DEVELOPMENT OPERATIONS

          On August 19, 2004, the Company  entered into a letter  agreement with
the Tribe, to develop a gaming facility in the Catskills region of New York. The
agreement provides for the Company to supply technical and financial  assistance
to the  Tribe  and  to  serve  as  its  exclusive  partner  in the  development,
construction,  financing,  operation and management of the proposed casino.  The
agreement  is for a term of one  year  and  became  effective  immediately.  The
Company  will also  provide  technical  assistance  and support  relating to the
settlement  of its land claim  against the State of New York.  The Company  will
provide  development  assistance of $35,000 per month to the Tribe in connection
with the establishment  and initial  operations of a tribal gaming authority for
New York gaming operations.

          The agreement calls for the Company and the Tribe to separately  enter
into a management  agreement and  development  agreement for the project through
good faith negotiations and submit the management  agreement for approval to the
National Indian Gaming Commission. All of the provisions of the above agreements
relating to the  management  of the casino are subject to review and approval by
the National Indian Gaming Commission prior to becoming effective.  Pending such
approval  and as a result of such  review,  such  provisions  may be  amended or
supplemented by the parties.

            On November 12, 2004, the State of New York and the Tribe  announced
execution  of a  settlement  agreement  relating to the Tribe's  land claims and
development of a Native  American  casino to be located in the Town of Thompson,
Sullivan  County.  The  agreement  provides that the State and Tribe shall enter
into a mutually satisfactory Class III gaming compact to operate a casino in the
Catskills, subject to approval of the Secretary of the Interior. The Company has
urged the State and the Cayuga Nation to pursue a similar  settlement  agreement
prior to December  31, 2004,  on which date the  Company's  agreements  with the
Cayuga Nation terminate.

MONTICELLO RACEWAY DEVELOPMENT

          Monticello Raceway Development is a New York limited liability company
with the exclusive right to design, engineer,  develop, construct, and furnish a
Class III Gaming  facility that will be developed on 29 of the 232 acres of land
at  the  Monticello  Raceway  in  Monticello,   New  York.   Monticello  Raceway
Development  also has the exclusive  right to develop the remaining 203 acres of
land to provide for  activities  supportive  of gaming,  such as  lodging,  food
service and  retail.  Monticello  Raceway  Development's  operating  results are
reported in the  consolidated  results of Empire  Resort's.  The first reporting
period  reflected in Empire Resorts  consolidated  results was the period ending
March 31, 2004.

          On April 3, 2003, Monticello Raceway Development entered into a gaming
facility development and construction agreement with the Cayuga Gaming Authority
and the Cayuga Nation of New York,  pursuant to which the Cayuga Catskill Gaming
Authority granted Monticello Raceway  Development the exclusive right to design,
engineer,  construct,  furnish  and  develop  the Cayuga  Catskill  Resort,  and
Monticello Raceway  Development agreed to help arrange financing of the project.
In exchange for these services,  the Cayuga Catskill Gaming Authority has agreed
to pay Monticello Raceway Development a development fee equal to 5% of the first
$505 million of the project's  costs,  payable  monthly as the project costs are
incurred.  However,  the Cayuga Catskill Gaming  Authority is entitled to retain
10% of such  development  fees until the  project is 50%  completed  and then 5%
until the project is completed.  On the  completion  date,  the Cayuga  Catskill
Gaming  Authority  is  required  to pay  Monticello  Raceway  Development  these
retained fees.  Additionally,  Monticello Raceway  Development is authorized $10
million for reimbursement of all pre-development and construction costs incurred
in connection with those 29 acres from the Cayuga Nation of New York.

          Monticello  Raceway  Development,  in  connection  with its gaming and
development activities,  capitalizes certain legal,  architectural,  engineering
and  environmental  study fees, as well as other costs  directly  related to the
gaming license and development of the real estate.  During the nine months ended
September 30, 2004,  Monticello Raceway  Development  capitalized  approximately
$3.5  million  of  additional  costs  associated  with  the  casino  development
projects.  Capitalized  costs  that are  specifically  related  to either of the
Native  American  projects are refundable  under certain  circumstances  and are
non-interest-bearing.  When the financing of the relevant operation is completed
the gaming  license and  development  costs will be evaluated for refund ability
and when the  operations  of a proposed  casino  commence the  balance,  if any,
systematically  recognized over a determinable  period.  These capitalized costs
are periodically  reviewed for impairment.  Should the Cayuga Nation of New York
fail to  negotiate a Compact  with the State of New York by December 31, 2004 or
the parties  fail to agree to extend the  agreements  the Company will write off
the costs  specifically  related to the Cayuga Catskill Resort. At September 30,
2004, Monticello Raceway Development employed four full-time employees.

          The Company believes that either of the management  contracts with the
Cayuga  Nation  trust land  casino or the  agreements  with the Tribe,  with all
appropriate  approvals,  will  generate  more  revenue  in the first year of the
contract than the gaming related  capitalized  costs at September 30, 2004. Most
of the costs that are  capitalized  at  September  30,  2004 will be  reimbursed
through provisions of the contracts.  We are currently  evaluating the available
deferred tax asset to utilize when this revenue becomes realizable.

MONTICELLO CASINO MANAGEMENT

          Monticello Casino Management was formed by us and CDL in July 2000 for
the stated  purpose of managing the  operations  of a casino and related  gaming
activities on the 29 acres of trust land.

                                       26

          On April 3, 2003,  Monticello Casino Management  entered into a gaming
facility management  agreement with the Cayuga Nation of New York and the Cayuga
Catskill Gaming Authority,  an  instrumentality of the Cayuga Nation of New York
which was formed to develop and  conduct  gaming  operations  on the 29 acres of
trust land. The deadline for the effectiveness of such agreement was extended on
June 25, 2004 to December 31, 2004. This  agreement,  the Cayuga Catskill Gaming
Authority  retained  Monticello  Casino  Management  to manage all casino  style
gaming activities,  other than horserace wagering,  that may be conducted on the
land for seven years  commencing  upon the National  Indian Gaming  Commission's
approval of the agreement.  Monticello  Casino Management has also been retained
to manage all lawful commercial activities on the land related to gaming such as
automatic teller machines,  food service,  lodging and retail. At the same time,
Monticello  Casino  Management has agreed to assist the Cayuga  Catskill  Gaming
Authority obtain financing for the gaming enterprise and all related  commercial
activities.  In exchange for these  services,  Monticello  Casino  Management is
entitled to receive a management  fee equal to 35% of the net  revenues  derived
from the operations it manages.  Monticello Casino Management is entitled to pay
itself  its  management  fee on or before the 25th day of each  calendar  month.
However,  before  Monticello  Casino  Management can pay itself its fee, it must
first  pay  to  the  Cayuga  Catskill  Gaming  Authority  a  minimum  return  of
approximately $516,000 per month.

          The Cayuga Catskill Resort is expected to feature:

          o    160,000  square feet of gaming space with 3,000 slot machines and
               200  table  games,   with  sufficient  space  to  accommodate  an
               additional 1,000 slot machines;
          o    separate bingo and poker areas;
          o    nine restaurants, including a buffet;
          o    several bars and a nightclub;
          o    5,000 parking spaces,  including 4,200 covered spaces all located
               directly underneath or adjacent to the casino;
          o    an enclosed retail corridor connected to Monticello Raceway;
          o    a central entertainment lounge; and
          o    a 40,000 square foot multi-function room.

          Monticello Casino Management's  financial results will be reflected in
the consolidated  results of Empire Resorts.  At September 30, 2004,  Monticello
Casino Management did not have any full-time employees or operations.

COMPETITION

          We believe  that the Raceway and Cayuga  Catskill  Resort are uniquely
situated to be successful  as the site for enhanced  gaming  operations,  as the
site is less than 90 miles northwest of New York City,  making it a shorter trip
from the nation's most populous  metropolitan  area than either Atlantic City or
any  regional  Native  American  casino,  including  Foxwoods and Mohegan Sun in
Connecticut.  There are  approximately one million adults living within 50 miles
of the Raceway and approximately  18.4 million adults living within 100 miles of
the Raceway  with an average  household  income of  approximately  $76,000.  The
Raceway is  directly  adjacent  to Highway  17, has highly  visible  signage and
convenient  access  and is less than 1,000  feet from the  highway.  There is no
direct  competition at this time for our VGM  operations  within 85 miles of the
Raceway.  However,  on July 4,  2004,  the State of  Pennsylvania  enacted a law
allowing for the operation of up to 61,000 slot  machines at 14 gambling  halls,
including seven racetracks,  five stand-alone parlors, and two resorts. Pursuant
to this new law, slot machine  facilities  could be developed within 30 miles of
the Raceway that compete directly with our VGM operation.  Furthermore,  while a
number of  prospective  competitors  have  expressed  interest in sponsoring the
development of another Native American casino in the Monticello,  New York area,
we believe that each of them is at a competitive  disadvantage  given our site's
ease of access,  our  ability to offer  horse  racing  and VGMs in  addition  to
regular  casino  gambling,   and  our  belief  that  we  and  our  partners  are
considerably  further along in the  regulatory  approval  process than any other
competitor.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

          The  following  is a  brief  discussion  of  the  critical  accounting
policies  used  in  the  preparation  of  the  Company's  financial  statements,
including  accounting  policies and methods used by the Company,  which  require
subjective  judgments and are considered very important to the  understanding of
the Company's financial condition.

          The significant  accounting  estimates  inherent in the preparation of
our  financial   statements  include  estimates   associated  with  management's
evaluation of the recoverability of gaming related  capitalized costs,  accounts
receivable and advances to tribal gaming authorities.

          In December 2002, the FASB issued  Statements of Financial  Accounting
Standards  No. 148  "Accounting  for  Stock-Based  Compensation--Transition  and
Disclosure--an  amendment of FASB Statement No. 123". This Statement amends FASB
Statement  No.  123,  "Accounting  for  Stock-Based  Compensation",  to  provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Statement  amends  the  disclosure  requirements  of  Statement  123 to  require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported  results.  Effective January 1, 2003 the Company adopted
this  standard  and will  report  the fair  value  recognition  provisions  on a
prospective  basis.  Recognition  of expenses  associated  with the  issuance of
options could have a material effect on operating  results in the interim period
that the options are issued.

                                       27




RESULTS OF OPERATIONS

     THREE  MONTHS  ENDED  SEPTEMBER  30, 2004  COMPARED TO THREE  MONTHS  ENDED
     SEPTEMBER 30, 2003

    The  operations of the Company  during the three months ended  September 30,
2004 and 2003 were not similar  due to the merger with CDL and its  subsidiaries
and the commencement of new the VGM operations on June 30, 2004.

    REVENUES. Revenues increased approximately $19 million for the quarter ended
September 30, 2004. The increase was due to the VGM operations that started June
30, 2004.

    OPERATING COSTS. Operating costs increased approximately $19 million for the
quarter  ended  September  30,  2004  due to the  start up and  operating  costs
associated with the VGM operations.

    SELLING,  GENERAL AND  ADMINISTRATIVE.  Selling,  General and Administrative
expenses  increased  approximately  $732,000  in the third  quarter of 2004 from
costs associated with the VGM operations.

    DEPRECIATION AND  AMORTIZATION.  Depreciation  and amortization  expense was
approximately   $316,000  and  $178,000  respectively  for  the  quarters  ended
September 30, 2004 and 2003.  This variance was due to  depreciation of building
improvements,  furniture,  fixtures and equipment  additions relating to the VGM
operations.

     NINE  MONTHS  ENDED  SEPTEMBER  30,  2004  COMPARED  TO NINE  MONTHS  ENDED
     SEPTEMBER 30, 2003

    The  operations  of the Company  during the nine months ended  September 30,
2004 and 2003 were not similar  due to the merger with CDL and its  subsidiaries
and the commencement of the new VGM operations on June 30, 2004.

    REVENUES.  Revenues increased  approximately $20 million for the nine months
ended September 30, 2004 due to the VGM operations.

    OPERATING COSTS. Operating costs increased approximately $23 million for the
nine months ended  September  30, 2004 due to the start up and  operating  costs
associated with the VGM operations.

    SELLING,  GENERAL AND  ADMINISTRATIVE.  Selling,  General and Administrative
expenses increased  approximately $4 million for the nine months ended September
30, 2004 from stock-based  compensation of approximately  $2.2 million and costs
associated with the VGM operations.

    DEPRECIATION AND  AMORTIZATION.  Depreciation  and amortization  expense was
approximately $336,000 and $526,000 respectively for nine months ended September
30, 2004 and 2003.

LIQUIDITY AND CAPITAL RESOURCES

     Net  cash  used in  operating  activities  during  the  nine  months  ended
September 30, 2004 totaled $7.7 million,  which is primarily attributable to the
start-up costs associated with the VGM operations and increased  payroll for new
employees.

     Net cash used in  investing  activities  in during  the nine  months  ended
September 30, 2004 totaled $30.2 million,  consisting primarily of approximately
$28 million in  purchases  of property  and  equipment  and  approximately  $2.1
million in costs associated with the casino development project.

     Net cash  provided by  financing  activities  during the nine months  ended
September 30, 2004 totaled $50.7  million,  which is primarily  attributable  to
approximately  $30.4  million from the  proceeds of the sale of stock  through a
private  placement  and  approximately  $62.2  million  from the sale of  senior
convertible notes, offset by the excess of market value over carrying value that
was  recorded as a reduction  to equity for the  related  party  purchase of the
property and equipment,  stock issuance  expenses of $2.3 million,  $5.1 million
for the  repayment of  promissory  notes,  and the repayment of the $3.5 million
note  issued  to The  Berkshire  Bank.  (See  Notes H, I and J to the  Financial
Statements)

     To prepare the property at the Monticello  Raceway for the VGM  operations,
the Company had  contractual  obligations  relating to  construction  of the VGM
renovations  of  approximately  $21  million.  The  balance  outstanding  of the
original  contract was  approximately  $2.5 million at September 30, 2004 and on
November 9, 2004 the balance was paid in full.

                                       28


          Monticello  Raceway  Management  recorded a $3.5  million loss for the
nine months ending September 30, 2004, excluding inter-company allocations.  The
net loss was mainly  attributable  to  non-recurring  costs  associated with the
start-up of the VGM operations  and the lease expense for the raceway  property.
The  pari-mutuel  operation  in the past has usually  generated a yearly  profit
however the Raceway has experienced a decrease in gross revenues due to a change
in the law allowing the State's OTB  operations  to take an unlimited  number of
tracks effectively limiting the exposure of Monticello's races in the OTB, and a
dispute in regards to off track betting parlor Dark Day money. Dark day money is
revenue  received from OTBs when racing is held at the Raceway and  thoroughbred
racing facilities are closed.  The Company estimates the disputed dark day money
at  approximately  $500,000 at September  30, 2004. If favorably  resolved,  the
Company will recognized the additional revenue.

     Any revenue projections would be base on information without any historical
data due to the start-up of the new VGM operations,  which produces the majority
of Monticello Raceway Management's revenue. It could be assumed that the revenue
flow from the VGM operations  would follow a seasonal trend line with the winter
months  producing  fewer  guests.  Therefore,  the Company  does not believe the
revenue  results for the third  quarter of 2004 will be indicative of the yearly
total revenue.

     On January 12, 2004, in order to better focus on the  development  of a VGM
program at the Raceway and current business  arrangements with the Cayuga Nation
and as a condition to the  consolidation  transaction with CDL, all interests of
the  plaintiffs,  including  any  interest  of  the  Company,  with  respect  to
litigation   against   Caesars   Entertainment,   Inc  which  alleged   tortuous
interference with contractual and business relationships,  were transferred to a
liquidating litigation trust. The Company agreed to provide the litigation trust
with a $2.5 million line of credit.  For the nine months  ending  September  30,
2004 the Company advanced approximately $250,000 in draws on the line of credit.
Due to the  unpredictable  nature  of the  litigation  and the  pending  motions
currently  under  review the  Company  provided  for a  valuation  allowance  of
approximately $250,000 against the receivable from the litigation trust.

     On January 30,  2004,  the  Company,  with the  assistance  of  Jefferies &
Company,  closed a private sale of 4,050,000  shares of common stock to multiple
investors  at a price of $7.50 per  share.  This sale of the  registered  shares
increased by approximately $30 million,  less expenses,  the Company's funds for
development  and  operations.  On February 13, 2004,  a  registration  statement
covering the resale of the shares  privately  placed by Jefferies & Company went
effective.

     On April 29, 2004,  the Company in settlement of all unpaid  dividends from
the first quarter of 2004,  due April 1, 2004 on its Series B Preferred  shares,
paid $30,000 in cash,  and on June 11, 2004 issued 16,074 shares of common stock
in settlement of all  outstanding  dividends  from the year ending  December 31,
2003.  The 16,074 shares were valued at  approximately  $210,000 and recorded in
the period ended June 30, 2004.

     On July 16, 2004,  the Company sold $65 million of 5.5% senior  convertible
notes,  guaranteed by its material subsidiaries,  that are presently convertible
into  approximately  4.7 million shares of common stock at a conversion price of
$13.75 subject to adjustment  upon the occurrence or  non-occurrence  of certain
events.  The notes were issued on July 26, 2004 with a maturity date of July 31,
2014. The Company will make interest  payments  semi-annually.  The Company used
part of the offering  proceeds to acquire 232 acres of land and buildings at the
Monticello Raceway in Monticello,  New York, from CDL, a related party, to repay
certain indebtedness, to complete renovations at the Monticello Raceway, to fund
certain  development costs in connection with the Cayuga Catskill Resort and for
general corporate purposes.

     The  notes  were  sold by the  initial  purchaser  in a Rule  144A  private
offering to qualified  institutional  buyers and were not  registered  under the
Securities  Act of 1933.  In  September of 2004 a shelf  registration  statement
covering the resale of the notes and common stock  issuable  upon  conversion of
the notes was filed with the SEC and subsequently  declared effective October 4,
2004.

     On July 26, 2004,  approximately  $5.3 million of proceeds  from the senior
convertible  notes was expended to pay in full the  obligation of the promissory
notes  payable and accrued  interest  due to the  Bryanston  Group and  Beatrice
Tollman.

     On July 26,  2004,  approximately  $38 million of proceeds  from the senior
convertible notes was expended to terminate a ground lease covering 232 acres in
Monticello,  New York,  and the  improvements  thereon,  owned by CDL, a related
party, by purchasing such leased  property.  Purchase of the land will allow the
Company to benefit  from  certain  real  estate tax credits  resulting  from its
recent investment in improvements on the land.

     On August 19,  2004,  the Tribe,  and the Company  entered  into a one year
agreement  where the  Company  agreed to  provide  $35,000  per month to pay the
expenses of establishing the tribal gaming authority or similar organization for
the Tribe to oversee its gaming activities and other gaming related costs. These
advances  will be  refunded  to the  Company  when the  development  project  is
financed.

          On November 12,  2004,  the Company  entered into a binding  agreement
with Concord Associates Limited  Partnership and an affiliate for acquisition of
the Concord and  Grossinger's  Resort Hotels and Golf Courses.  The  acquisition
includes  casino  and  hotel  development  sites,  and a 72  hole  golf  course,
including the Monster, International,  Challenger and Grossinger's Golf Courses.
Concord Associates  Limited  Partnership is a joint venture owned 46% by Reckson
Strategic Venture Partners, a real estate venture capital fund.

          As  consideration  for the  acquisition,  the  Company  will  issue 18
million  shares of  common  stock to  Concord  Associates  Limited  Partnership,
representing  approximately  40% of the total  number of issued and  outstanding
common shares of the Company after the closing, on a fully diluted basis and the
assumption  of related  debt.  The  closing  is  subject  to certain  approvals,
including  a vote in favor of the  transaction  by a majority  of the  Company's
shareholders, and regulatory approval of at least one land to trust transfer for
a gaming facility at any of the casino development sites owned by the Company or
Concord Associates Limited Partnership.

                                       29




ITEM 3. CONTROLS AND PROCEDURES

     The Company's  management is responsible for establishing and maintaining a
system of  disclosure  controls  and  procedures  (as defined in Rule 13a-15 and
15d-15 under the Securities  Exchange Act of 1934 (the "Exchange Act")) designed
to ensure  that  information  required  to be  disclosed  by the  Company in the
reports that it files or submits under the Exchange Act is recorded,  processed,
summarized and reported, within the time periods specified in the Securities and
Exchange  Commission's  rules and  forms.  Disclosure  controls  and  procedures
include,  without  limitation,  controls and procedures  designed to ensure that
information  required to be  disclosed by an issuer in the reports that it files
or  submits  under the  Exchange  Act is  accumulated  and  communicated  to the
issuer's  management,  including its principal executive officer or officers and
principal   financial  officer  or  officers,   or  persons  performing  similar
functions,   as  appropriate  to  allow  timely  decisions   regarding  required
disclosure.

     In  accordance  with  Exchange  Act Rules  13a-15 and  15d-15,  the Company
carried out an evaluation, with the participation of the Chief Executive Officer
and Chief Financial  Officer of the  effectiveness  of the Company's  disclosure
controls  and  procedures  as of the end of the period  covered by this  report.
Based on that  evaluation,  the  Company's  Chief  Executive  Officer  and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures were  effective,  as of the end of the period covered by this report,
to provide reasonable assurance that information required to be disclosed in the
Company's  reports  filed or  submitted  under  the  Exchange  Act is  recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange Commission's rules and forms.

     In designing and  evaluating  the Company's  disclosure  and procedures (as
defined  in Rules  13a-15(e)  or  15d-15(e)  of the  Exchange  Act),  management
recognized  that any controls and  procedures,  no matter how well  designed and
operated,  can provide  only  reasonable  assurances  of  achieving  the desired
control objectives,  as ours are designed to do, and management  necessarily was
required to apply its judgment in evaluating the  cost-benefit  relationship  of
possible  controls and procedures.  We believe that our disclosure  controls and
procedures provide such reasonable assurance.


     No change occurred in the Company's internal controls concerning  financial
reporting  during the third  quarter of the fiscal year ended  December 31, 2004
that has materially  effected,  or is reasonably likely to materially effect the
Company's internal controls over financial reporting.


                                       30




                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     The  Monticello   Harness   Horsemen's   Association,   Inc.   ("Horsemen",
"Horsemen's  Association")  has  brought  multiple  actions  against  Monticello
Raceway Management and an Officer of one of the Company's subsidiaries.

     One of the actions seeks  approximately  $1.6 million to be credited to the
Horsemen's  purse  account,  and an additional  $4 million in punitive  damages.
Another  case is  questioning  a racing  series that  purportedly  violated  the
contract with Monticello Raceway Management.

     Another  seeks  monetary  damages of  approximately  $500,000,  claims that
certain  monies  (approximately  $80,000) which should have been used solely for
"overnight  purses"  were  expended by the Raceway for a special  racing  series
known as the William  Sullivan Pacing Series,  that management has not increased
purses to the Horsemen for overnight  racing as requested by the  Horsemen,  and
that management is improperly  holding up  approximately  $400,000 in an account
that is earmarked for payment of purses until such time as  management  deems it
appropriate.  Another action seeks approximately $2 million in damages, claiming
that  management  has withheld  various  simulcasting  and OTB revenues from the
Horsemen's  purse  account  and  deducted  various   unauthorized   simulcasting
expenses.  Management has responded  vigorously to this  litigation,  and at the
same time will seek,  if  possible,  to resolve  these  issues in the context of
contract negotiations with the Horsemen's Association that are ongoing.

     Another  action  by  the  Horsemen's   Association   sought  an  injunction
preventing management from consolidating the barn area by removing approximately
50% of the barns and moving the Horsemen to different barns and also seeks money
damages for such conduct. A temporary  restraining order at the inception of the
case was vacated after a hearing,  and the decision of management to consolidate
the barn area and deny stall space to certain  Horsemen  was upheld by the Court
on the injunction motion.  Management responded vigorously to this litigation as
it  challenged  management's  rights  clause in the  contract.  There is further
discovery pending.

     The Company's  ability to  participate in New York's VGM program or to help
develop  and  manage a Native  American  casino in  conjunction  with the Cayuga
Nation of New York could be hampered  by the  outcome of two  pending  lawsuits,
Dalton v. Pataki and Karr v.  Pataki,  that seek to enjoin the State of New York
from proceeding  with the VGM program or permitting the  construction of any new
Native American casinos within the State of New York's borders.  The trial court
initially  dismissed both of these cases in May of 2003. The plaintiffs filed an
appeal of the trial court's  dismissal.  On July 7, 2004, the Appellate Division
of the  Supreme  Court of the State of New York  overturned  the  trial  court's
dismissal of certain of the plaintiffs' claims in respect of VGM operations.  In
overturning the trial court,  the Appellate  Division ruled that the legislation
permitting state sponsored VGM operations is unconstitutional under New York law
because  such  legislation  provides  that a portion of the VGM  vendor  fees be
dedicated   to  breeding   funds  and   enhancing   purses  in  violation  of  a
constitutional  mandate that such moneys be applied exclusively to, or in aid or
support  of,  education  in the State of New York.  The  office of the  Attorney
General  of the State of New York has filed a notice of appeal  with  respect to
the Appellate Division's  invalidation of the VGM legislation.  Should the State
of New York both lose its appeal and fail to enact corrective  legislation,  our
operations  would be restricted  to the operation of Monticello  Raceway and our
proposed management and development of a Native American casino.  Moreover,  the
continuation of these lawsuits,  even prior to a definitive ruling on the merits
of the cases,  could hamper  fundraising  efforts for the Cayuga Catskill Resort
and otherwise  adversely  affect the  implementation  of the Company's  business
plan, as investors might be reluctant to invest given the uncertainty  that such
a holding would create.

     The opinion,  however,  separately affirmed the decision of the lower court
to uphold the  constitutionality  of the  provisions of the law that  authorized
expanded  Native  American casino gaming in New York State and found that it was
consistent with New York and federal laws.

     On August 5, 2004,  we received a letter from a purchaser of $10 million of
notes, in our 5.5% $65 million senior  convertible note offering,  demanding the
immediate  rescission of its full note purchase.  This purchaser claims that the
offering  circular with respect to these notes was misleading  because it failed
to  disclose  the true status of the  litigation  settlement  talks  between the
Cayuga  Nation  of New York and the  State  of New York and the  existence  of a
competing  claim in the same lawsuit by the Seneca Cayuga  Tribe.  The purchaser
further claims that had these  disclosures been timely made by us, the purchaser
would not have  participated in the note offering.  We believe that these claims
are without merit and intend to vigorously defend any action that may be brought
against  us  with  respect  to the  rescission  of any  note  purchases  by this
purchaser.
                                       31



OPERATING ENVIRONMENT

     We are a party from time to time to various  other legal  actions that have
arisen in the normal course of business.  In the opinion of our management,  the
resolution of these other matters will not have a material and adverse effect on
the  consolidated  financial  position,  results of operations or cash flows.

ITEM 6.  EXHIBITS

     10.1 Line of credit dated January 12, 2004 between Empire Resorts,  Inc and
          Catskill   Litigation   Trust  and  related   promissory   note.
     31.1 Certification  of the Chief Executive  Officer pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002.
     31.2 Certification  of the Chief Financial  Officer pursuant to Section 302
          of the Sarbanes-Oxley Act of 2002.
     32.1 Certification  of the Chief Executive  Officer pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002.
     32.2 Certification  of the Chief Financial  Officer pursuant to Section 906
          of the Sarbanes-Oxley Act of 2002

                                       32




                      EMPIRE RESORTS, INC. AND SUBSIDIARIES



                                   SIGNATURES

     In  accordance  with the  requirements  of the  Exchange  Act of 1934,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.


Dated: November 15, 2004                   /s/ ROBERT A. BERMAN
                                           --------------------
                                           Chief Executive Officer
                                           Robert A. Berman



Dated:  November 15, 2004                 /s/ SCOTT A. KANIEWSKI
                                          ----------------------
                                          Scott A. Kaniewski
                                          Chief Financial Officer

EX-10

                                                                    Exhibit 10.1

                              EMPIRE RESORTS, INC.
                                     Rt. 17B
                           Monticello, New York 12701

                                                                January 12, 2004


Catskill Litigation Trust
477 Madison Avenue
New York, New York 10022
Attention: Joseph Bernstein and Paul deBary

Dear Sirs:

     Empire Resorts, Inc., a Delaware corporation (the "Company"), is pleased to
provide  the  Catskill   Litigation  Trust,  a  Delaware  Statutory  Trust  (the
"Litigation  Trust"),  an irrevocable  line of credit on the following terms and
conditions.  All  defined  terms not  otherwise  defined  herein  shall have the
meanings  assigned  to such  terms in the  Declaration  of Trust  governing  the
Litigation Trust (the "Declaration of Trust").

Amount:                           Up to $2,500,000  outstanding at any one time;
                                  to be  advanced  from  time  to  time  for the
                                  purposes set forth below at the request of the
                                  Litigation Trustees as provided below.

Borrower:                         Litigation Trust.

Type of Loans:                    No  interest  is payable  on amounts  advanced
                                  hereunder. Such amounts shall be repaid solely
                                  from the limited sources, at the time or times
                                  and in the manner  provided  in Section 2.4 of
                                  the Declaration of Trust.

Purpose:                          To provide  funds to pay any and all  expenses
                                  of the Litigation  Trust  permitted  under the
                                  Declaration of Trust.

Advances:                         So long as there is an available balance under
                                  this line of credit, the Company shall advance
                                  funds to the Litigation Trust promptly, and in
                                  any event  within  five  Business  Days,  upon
                                  receipt  by  the  Company,  at  its  principal
                                  corporate  offices,  or at such other place as
                                  shall be designated  by written  notice to the
                                  Trustees,  of a written order duly executed by
                                  each of the Litigation  Trustees,  stating, in
                                  United  States  dollars,  the  amount  of  the
                                  advance  requested  to be paid to the order of
                                  the  Litigation  Trust,  and the  date of such
                                  requisition.   Any  such  requisition  may  be
                                  delivered in two counterparts,  each signed by
                                  one of the Litigation  Trustees.  For purposes
                                  hereof,   Business  Day  shall  mean  any  day
                                  excluding (a) Saturday,  (b) Sunday and (c)(i)
                                  any day  which is a legal  holiday  under  the
                                  laws of the State of New York or (ii) is a day
                                  on which banking  institutions located in such
                                  State are  authorized  or  required  by law or
                                  other governmental action to close.

Repayments:                       Repayments  may be made as a whole  or in part
                                  from time to time at any time without  notice.
                                  The Litigation  Trust may reborrow any amounts
                                  so repaid.

     This Line of Credit is a full faith and credit  obligation  of the Company,
shall be equal in  priority to all  general  creditors  of the Company and shall
remain in full force and effect until the termination of the Litigation Trust.

     All advances hereunder shall be made directly to the Administrative Trustee
for credit to the Expense Fund  established  under the  Declaration  of Trust by
corporate  check or by  federal  funds  wire  transfer  as  directed  in written
instructions  to the  Company  by the  Administrative  Trustee.  The  Litigation
Trustees  shall  execute  a Note in the form  attached  hereto to  evidence  the
obligation of the Litigation  Trust to repay the amounts  advanced  hereunder in
accordance with the Declaration of Trust and the Company and the  Administrative
Trustee  shall be  responsible  to  maintain  accurate  records  of all  amounts
advanced or repaid hereunder.

                                       2

                 [SIGNATURE PAGE TO IRREVOCABLE LINE OF CREDIT]

     Kindly indicate your agreement to the above by signing this letter.

                                          Very truly yours,

                                          EMPIRE RESORTS, INC.


                                          By:  /S/Robert A. Berman
                                             -----------------------------
                                             Name:  Robert A. Berman
                                             Title: Chief Executive Officer

ACCEPTED AND AGREED TO:

CATSKILL LITIGATION TRUST



By: /s/ Joseph E. Bernstein
    -----------------------
    Name:  Joseph E. Bernstein
    Title: Trustee


By: /s/ Paul A. deBary
    -----------------------
    Name:  Paul A. deBary
    Title: Trustee






                            CATSKILL LITIGATION TRUST
                                      NOTE

                                                              New York, New York
$2,500,000                                                      January 12, 2004

     For value received,  CATSKILL  LITIGATION TRUST, a Delaware Statutory Trust
(the  "Litigation  Trust"),  hereby promises to pay, solely at the times, in the
manner  and  from the  limited  sources  provided  in the  Declaration  of Trust
referred to below, to the order of EMPIRE RESORTS,  INC., a Delaware corporation
("Empire"),  or its  successors  or assigns the sum as provided on Schedule  "A"
attached hereto (as may be amended from time to time to reflect  "Advances") not
to exceed $2,500,000 (the "Total Loan Amount").

     The  Litigation  Trust may request  Advances up to the Total Loan Amount by
giving  telephonic,  faxed or electronic  notice,  confirmed in writing by hand,
first class mail or courier to Empire.  Empire shall make the requested Advances
to the Litigation Trust within five (5) Business Days of receipt of such notice.
Upon making each Advance,  Empire is hereby  authorized  to amend  Schedule A to
reflect such Advance, the date such Advance was made and the aggregate principal
amount then outstanding;  provided;  however, that the failure of Empire to make
any such amendment  shall not limit or otherwise  affect the  obligations of the
Litigation Trust under this Note.

     The principal shall be payable upon distributions from the Litigation Trust
in accordance  with Section 2.4 of the  Declaration  of Trust of the  Litigation
Trust dated the date hereof (the "Declaration of Trust"). No interest is payable
on this Note, but  additional  amounts are payable as  reimbursements  to Empire
under the  Declaration  of Trust,  to the extent  funds are  available  for such
purpose thereunder as provided in the Declaration of Trust.

     All  payments of  principal in respect to this Note shall be made in lawful
money of the United  States of America to Empire,  at its office  located at c/o
Monticello  Raceway,  Route 17B,  Monticello,  New York 12701,  or at such other
place as shall be designated in writing by Empire for such purpose.

     This Note is issued pursuant to the line of credit granted by Empire to the
Litigation Trust pursuant to the letter agreement,  dated as of the date hereof,
between Empire and the Litigation Trust (the "Line Letter").  Capitalized  terms
used herein without definition shall have the meanings assigned to such terms in
the Line Letter.

     The  Litigation  Trust may at its option at any time and from time to time,
without  notice  to  Empire,  repay,  as a whole  or in  part,  the  outstanding
principal  amount of this Note.  Upon receipt of any such payment,  Empire shall
amend Schedule A to reflect such repayment, the date such repayment was made and
the aggregate  principal amount then outstanding;  provided,  however,  that the
failure of Empire to make any such  amendment  shall not  increase or  otherwise
affect the obligations of the Litigation Trust under this Note.

     The Litigation Trust hereby waives diligence,  presentment,  demand, notice
of protest  and, to the full  extent  permitted  by law,  the right to plead any
statute of limitations as a defense to any demand hereunder.



     Payments  under this Note shall be made and payable  solely from the funds,
in the amounts,  in the manner and at the times  provided in the  Declaration of
Trust.

     No reference herein to the Line Letter and no provision of this Note or the
Line Letter shall alter or impair the obligation of the Litigation Trust,  which
is absolute and  unconditional,  to pay the principal of this Note at the place,
at the respective time or times, and in the currency herein prescribed.

     The terms of this Note are not  subject  to  amendment  and the  Litigation
Trust may not assign its obligations  hereunder or under the Line Letter without
the prior written consent of Empire.

     THE LINE  LETTER  AND THIS NOTE  SHALL BE  GOVERNED  BY AND  CONSTRUED  AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.

     All notices,  requests,  consents and other communications hereunder to any
party,  shall be deemed to be  sufficient  if in writing  and (i)  delivered  in
person,  (ii)  delivered  and  received  by telex,  telecopier,  telegram,  if a
confirmatory  mailing in  accordance  herewith is also made,  (iii) duly sent by
registered  mail return receipt  requested and postage prepaid or (iv) duly sent
by overnight delivery service,  addressed if sent to either the Litigation Trust
or Empire  at Route  17B,  Monticello,  New York  12701.  All such  notices  and
communications shall be deemed to have been received: (i) at the time personally
delivered  (including  delivery by telex,  telecopier and telegram);  (ii) three
days after mailed to the  foregoing  persons at the  addresses  set forth above;
(iii)  the next day when  sent by  overnight  delivery  service;  provided  that
rejection or other refusal to accept or inability to deliver  because of changed
address for which no notice has been received shall also constitute receipt.

                                       2



               [SIGNATURE PAGE TO CATSKILL LITIGATION TRUST NOTE]

     IN WITNESS WHEREOF,  Catskill Litigation Trust has duly executed this Note,
the day and year first above written.


                                    CATSKILL LITIGATION TRUST



                                    By: /s/  Joseph E. Bernstein
                                        ------------------------------
                                        Name:   Joseph E. Bernstein
                                        Title:  Trustee


                                    By: /s/ Paul A. deBary
                                        ------------------------------
                                        Name:    Paul A. deBary
                                        Title:   Trustee










                                SCHEDULE A

  DATE OF                       BALANCE OF
 ADVANCE OR                      PRINCIPAL          SIGNATURE         SIGNATURE
  PAYMENT        AMOUNT         OUTSTANDING          OF HOLDER         OF MAKER
  -------        ------         -----------          ---------         --------

EX-31

                                                                    EXHIBIT 31.1


                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER


      I, Robert A. Berman, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Empire Resorts, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial condition,  results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;

4. The small business  issuer's other  certifying  officer and I are responsible
for establishing and maintaining  disclosure controls and procedures (as defined
in Exchange  Act Rules  13a-15(e)  and  15d-15(e))  and  internal  control  over
financial  reporting (as defined in Exchange Act Rules  13a-15(f) and 15d-15(f))
for the small business issuer and have:

(a) Designed such disclosure controls and procedures,  or caused such disclosure
controls and  procedures to be designed  under our  supervision,  to ensure that
material  information  relating  to the small  business  issuer,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) Designed  such internal  control over  financial  reporting,  or caused such
internal control over financial  reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles;

(c)  Evaluated  the  effectiveness  of the small  business  issuer's  disclosure
controls and procedures and presented in this report our  conclusions  about the
effectiveness  of the disclosure  controls and procedures,  as of the end of the
period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the small business  issuer's internal
control  over  financial  reporting  that  occurred  during  the small  business
issuer's  most  recent  fiscal  quarter  that  has  materially  affected,  or is
reasonably  likely to materially  affect,  the small business  issuer's internal
control over financial reporting; and

5. The small business  issuer's other  certifying  officer and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to the small business  issuer's  auditors and the audit committee of
the small business issuer's board of directors:

(a) All  significant  deficiencies  and  material  weaknesses  in the  design or
operation of internal  control over  financial  reporting  which are  reasonably
likely to  adversely  affect  the small  business  issuer's  ability  to record,
process, summarize and report financial information; and

(b) Any fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant  role in the small business  issuer's  internal
control over financial reporting.

          Date: November 15, 2004


          /s/ Robert A. Berman
          --------------------
          Robert A. Berman
          Chief Executive Officer

EX-31

                                                                    EXHIBIT 31.2

                    CERTIFICATION OF Chief Financial Officer


      I Scott A. Kaniewski, Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Empire Resorts, Inc;

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial condition,  results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;

4. The small business  issuer's other  certifying  officer and I are responsible
for establishing and maintaining  disclosure controls and procedures (as defined
in Exchange  Act Rules  13a-15(e)  and  15d-15(e))  and  internal  control  over
financial  reporting (as defined in Exchange Act Rules  13a-15(f) and 15d-15(f))
for the small business issuer and have:

(a) Designed such disclosure controls and procedures,  or caused such disclosure
controls and  procedures to be designed  under our  supervision,  to ensure that
material  information  relating  to the small  business  issuer,  including  its
consolidated subsidiaries,  is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) Designed  such internal  control over  financial  reporting,  or caused such
internal control over financial  reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles;

(c)  Evaluated  the  effectiveness  of the small  business  issuer's  disclosure
controls and procedures and presented in this report our  conclusions  about the
effectiveness  of the disclosure  controls and procedures,  as of the end of the
period  covered by this report based on such  evaluation;  and

(d) Disclosed in this report any change in the small business  issuer's internal
control  over  financial  reporting  that  occurred  during  the small  business
issuer's  most  recent  fiscal  quarter  that  has  materially  affected,  or is
reasonably  likely to materially  affect,  the small business  issuer's internal
control over financial reporting; and

5. The small business  issuer's other  certifying  officer and I have disclosed,
based  on  our  most  recent  evaluation  of  internal  control  over  financial
reporting,  to the small business  issuer's  auditors and the audit committee of
the small business issuer's board of directors:

(a) All  significant  deficiencies  and  material  weaknesses  in the  design or
operation of internal  control over  financial  reporting  which are  reasonably
likely to  adversely  affect  the small  business  issuer's  ability  to record,
process, summarize and report financial information; and

(b) Any fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant  role in the small business  issuer's  internal
control over financial reporting.


     Date: November 15, 2004


     /s/ Scott A. Kaniewski
     ----------------------
     Scott A. Kaniewski
     Chief Financial Officer

EX-32

                                                                    Exhibit 32.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

  Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss.1350)

Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002 (18 U.S.C.  ss.1350),
the  undersigned,  Robert A.  Berman,  Chairman and Chief  Executive  Officer of
Empire  Resorts,  Inc.,  a Delaware  corporation  (the  "Company"),  does hereby
certify, to his knowledge, that:

The Quarterly report Form 10-QSB for the quarter ended September 30, 2004 of the
Company (the "Report") fully complies with the  requirements of section 13(a) or
15(d) of the Securities  Exchange Act of 1934, and the information  contained in
the Report fairly presents,  in all material respects,  the financial  condition
and results of operations of the Company.


Date: November 15, 2004


By: /s/Robert A. Berman
    -----------------------
    Robert A. Berman
    Chief Executive Officer

EX-32

                                                                    EXHIBIT 32.2


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

  Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. ss.1350)

Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002 (18 U.S.C.  ss.1350),
the undersigned,  Scott A. Kaniewski, Chief Financial Officer of Empire Resorts,
Inc.,  a Delaware  corporation  (the  "Company"),  does hereby  certify,  to his
knowledge, that:

The Quarterly report Form 10-QSB for the quarter ended September 30, 2004 of the
Company (the "Report") fully complies with the  requirements of section 13(a) or
15(d) of the Securities  Exchange Act of 1934, and the information  contained in
the Report fairly presents,  in all material respects,  the financial  condition
and results of operations of the Company.


Date: November 15, 2004


By: /s/Scott A. Kaniewski
    -----------------------
    Scott A. Kaniewski
    Chief Financial Officer