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Churchill Downs reports results

Net revenues from continuing operations for the second quarter of 2008 totaled $179.3 million, an increase of 6 percent over net revenues from continuing operations of $169.9 million recorded during the second quarter of 2007. Net revenues from continuing operations for the quarter were positively affected by the performance of the Company's advance-deposit wagering ("ADW") business, gaming revenues related to the temporary slots facility at Fair Grounds Race Course ("Fair Grounds"), and additional operating revenues from the 2008 Kentucky Derby and Kentucky Oaks. These increases were offset in part by a decline in pari-mutuel business at Calder Race Course ("Calder"), caused primarily by the Florida Horsemen's Benevolent and Protective Association ("Florida HBPA") decision to withhold consent to export racing signals from Calder during the second quarter of 2008. In addition, local horsemen's groups in Ohio, Kentucky, Delaware, Virginia, Pennsylvania, Texas and Maryland withheld consents for certain racetracks to export their signals to Calder, while disputes in Kentucky and Florida over distribution of the simulcast signal to certain ADW businesses also offset net revenues from continuing operations.

Net earnings from continuing operations for the second quarter were $29.4 million, or $2.10 per diluted common share, compared to net earnings from continuing operations of $29.5 million, or $2.12 per diluted common share, during the second quarter of 2007. The Company's EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations increased 4 percent year over year from $55.1 million in 2007 to $57.5 million in 2008. Calder's inability to export its signal to locations (including racetracks and off-track betting facilities) outside of Florida and import certain out-of-state racetracks resulted in a negative impact of approximately $3 million on the EBITDA of the Company's Racing Operations. In addition, the inability to export Calder and Churchill Downs signals to certain ADW businesses resulted in a negative impact of approximately $1 million on the EBITDA of the Company's Racing Operations. Year-to-date revenue increased 13 percent and year-to-date EBITDA, which included $17.2 million of net insurance recoveries from Louisiana, increased 45 percent over the first six months of 2007.

"Through the second quarter of 2008, we have continued to manage our business and expenses in a fiscally prudent manner, with an eye toward growth and positive returns," said Churchill Downs Incorporated President and Chief Executive Officer Robert L. Evans. "Despite a tough economic and industry environment, and despite simulcast signal disputes with horsemen, we were able to grow revenue and EBITDA over 2007 levels. We have generated $85 million in cash from operations so far this year, which has been used to pay down the debt used to fund the acquisition of certain assets of AmericaTab, Bloodstock Research Information Services ("BRIS") and the Thoroughbred Sports Network in June 2007. Our long-term debt was $10 million at the end of the second quarter. I am very proud of the effort put forward by the CDI team to make this happen.

"We have enjoyed success at our temporary slots facility at Fair Grounds, which continues to outperform our expectations," Evans continued. "The permanent slots facility at Fair Grounds is currently on budget and on schedule to open later this year. We are still not prepared to move forward with the announcement of our plans regarding a slots operation at Calder. We have reached an agreement with the Florida HBPA but we are still awaiting resolution of the slot agreement by Florida Thoroughbred breeders. Once we have their agreement, we will begin exploring the avenues necessary to proceed with our plans. While we are quite pleased with TwinSpires.com's 12 percent growth in handle over 2008's first-quarter levels, we believe we could have done considerably better if not for disputes with Florida and Kentucky horsemen over ADW signal pricing.

"We hope that we can reach agreements with our local horsemen's groups over ADW signal pricing. We believe that the ADW business in general and TwinSpires.com in particular are extremely important to the future of our industry, and we will not rush into any arrangement with horsemen that could compromise the financial health of advance-deposit wagering in the future."

During the second quarter of 2008, the Company implemented a business realignment that more properly considers changes in the business. As a result of this realignment, the Company redefined its business segments into the following four segments: (1) Racing Operations, which includes Churchill Downs, Calder, Arlington Park and its 11 off-track betting facilities ("OTBs") and Fair Grounds and its 10 OTBs; (2) Online Business, which includes TwinSpires.com, CDI's ADW business, and our BRIS data business, as well as the Company's equity investment in Horse Racing TV; (3) Gaming, which includes video poker and slot operations; and (4) Other Investments, including Churchill Downs Simulcast Productions and other of the Company's minor investments.

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