Churchill Downs reports results

8 August 2007

Net revenues from continuing operations for the second quarter of 2007 grew 4.1 percent to $169.9 million, compared to net revenues from continuing operations of $163.3 million during the second quarter of 2006. This growth occurred despite the fact that the number of race days during the second quarter declined by 3.8 percent from 132 days in 2006 to 127 days during the same period in 2007. Net revenues were positively impacted year over year primarily by the following:

The launch of the Company's account-wagering platform, Twinspires.com. The Company's acquisitions of the AmericaTAB and Bloodstock Research Information Systems companies in June 2007;

Increased seating and corporate hospitality revenues associated with the 2007 Kentucky Derby and Kentucky Oaks at Churchill Downs racetrack; and

Higher pari-mutuel revenues at Arlington Park, which the Company believes is partly attributable to increased field sizes related to Arlington's installation of a synthetic racing surface in April 2007.

Net earnings from continuing operations during the second quarter of 2007 were $29.5 million, or $2.12 per diluted common share, compared to $34.8 million, or $2.56 per diluted common share, during the second quarter of 2006. The decrease in quarterly net earnings from continuing operations year over year is due primarily to the following factors:

During the second quarter of 2006, the Company recognized $10.1 million of pre-tax insurance recoveries, net of impairment losses, related to storm damage that occurred at Fair Grounds Race Course and Calder Race Course during the summer and fall of 2005; and

During the second quarter of 2007, the Company recorded share-based executive compensation costs of approximately $2.6 million, which are attributable to equity awards granted to the chief executive officer at the time of hiring and approved during the annual meeting of Churchill Downs shareholders on June 28, 2007.

The additional second-quarter costs were partially offset by the Company's gain on the sale of excess land surrounding its Quad City Downs off-track betting ("OTB") location in northern Illinois for $1.7 million. The Company's EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations decreased year over year due to the storm-related insurance recoveries of $10.1 million that were recorded during the second quarter of 2006.

President and Chief Executive Officer Robert L. Evans said the Company achieved solid financial results during the quarter, which included the implementation of several strategic initiatives. "During the second quarter of 2007, our Company grew net revenues from continuing operations while also launching our new account-wagering service, www.twinspires.com; acquiring three additional account-wagering platforms, Winticket.com, BrisBET.com and TsnBET.com and their affiliated data services companies; devoting time and resources to the execution of HorseRacing TV(TM) and Track Net Media Group LLC, two business ventures we announced late in the first quarter; hosting another successful Kentucky Derby and Kentucky Oaks; and unveiling a new synthetic racing surface at Arlington Park that we believe has positively affected on- and off-track results there," said Evans. "Total second-quarter handle was lower year over year due to the fact that we had five fewer race days during the quarter and two account-wagering providers, a major rebate operator and wagering outlets affiliated with the Choctaw Nation were not accepting wagers on races at Churchill Downs racetrack. However, our net pari-mutuel revenues from continuing operations were still up 2.6 percent. That increase is due to the higher host fees charged to account-wagering companies for our racing products by TrackNet Media Group LLC. The end result has been higher revenues through account-wagering channels for horsemen and our tracks, which together create the horse racing content our customers enjoy.

"During the quarter, we witnessed the positive impact of our entry into the account-wagering business and made progress on two alternative gaming initiatives. Calder Race Course and its pari-mutuel partners in South Florida successfully placed a local voter referendum on slot machine gaming for existing pari-mutuel facilities in Miami-Dade County on the ballot for Jan. 29, 2008. Additionally, Fair Grounds Race Course is constructing its temporary slot machine gaming facility and is on schedule to open that operation later this fall. Fair Grounds is also moving forward this summer with the construction of its permanent facility, which is scheduled to open in the fall of 2008."

Evans concluded, "We did much to move our business forward strategically and financially during the second quarter, while continuing to deliver value to our shareholders. During the second half of the year, we look forward to further growth in our account-wagering business, to adding slot machine gaming to our product offerings in Louisiana, and to making further progress on reducing our overall cost structure."