Churchill Downs Reports Loss

LOUISVILLE, Kentucky – (PRESS RELEASE) -- Churchill Downs Incorporated ("CDI" or the "Company") (Nasdaq: CHDN) today reported results for the third quarter ended Sept. 30, 2004.

Net revenues for the third quarter totaled $122.2 million, a decrease of 1.4 percent compared with net revenues of $124.0 million for the same period a year ago. Net loss for the quarter -- factoring in impairment charges of $6.2 million for Ellis Park -- was $3.8 million, compared to earnings of $7.9 million in 2003. Diluted earnings per share, including the $0.34 in Ellis Park impairment charges, totaled a loss of $0.29, compared to earnings of $0.59 for the third quarter of 2003. Results for the first nine months of 2004 are outlined in the accompanying tables.

Thomas H. Meeker, CDI's president and chief executive officer, said the third quarter results also reflect the impact of the Company's ongoing investment in potential growth opportunities. "We made it clear that 2004 would be a repositioning year in which we invested in initiatives such as Customer Relationship Management ("CRM") and alternative gaming efforts that could increase earnings going forward. During the third quarter, we spent aggressively in support of ballot initiatives in California and Florida that, if approved, would benefit our operations in those states.

"Looking ahead, we believe that our actions in 2004 position us well for renewed growth in 2005 and beyond," added Meeker. "Our initiative supporting alternative gaming in Florida is on the ballot for November, and we believe significant progress was made by the racing industry in California. We anticipate returns next year from CRM and our completed Master Plan renovation at Churchill Downs. In addition, with the acquisition of Fair Grounds Race Course, we have supplemented our racing calendar and for the first time will introduce alternative forms of gaming into our core business."

As detailed in CDI's earnings revision announcement on Oct. 11, the Company's third quarter loss was the result primarily of two key factors: increased spending on the alternative gaming ballot initiatives and impairment charges at Ellis Park, triggered by softness in business at the racetrack. These items are also largely responsible for the Company's revision of full- year earnings guidance to a range of $1.00 to $1.05 per share.

CDI will benefit in the fourth quarter from its sale today of a 19-percent stake in Kentucky Downs, including debt owed to CDI, to Kelley Farms Racing LLC, according to Meeker. As part of the terms of the transaction, former CDI board member Brad M. Kelley exchanged shares of CDI stock valued at $3.2 million for the stake. The sale reduces CDI's ownership of Kentucky Downs to a total of 5 percent. CDI has held a minority interest in the racetrack since 1997.

A conference call regarding this release is scheduled for Wednesday, Oct. 20, 2004, beginning at 9 a.m. (EDT). Investors and other interested parties may listen to the teleconference by accessing the online, real-time webcast and broadcast of the call at http://www.churchilldownsincorporated.com/investor_relations or http://www.fulldisclosure.com or by calling (913) 981-5510 at least

10 minutes before the appointed time. The online replay will be available at approximately noon (EDT) and continue for two weeks. A six-day telephonic replay will be available two hours after the call ends by dialing (719) 457-0820 and entering 825996 when prompted for the access code. A copy of the Company's press release announcing earnings and relevant financial and statistical information about the period will be accessible at http://www.churchilldownsincorporated.com/investor_relations .

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"), the Company has provided a non-GAAP measurement, which presents a financial measure of Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"). CDI uses EBITDA as a key performance measure of results of operations for purposes of evaluating performance internally. The Company believes the use of this measure enables management and investors to evaluate and compare, from period to period, CDI's operating performance in a meaningful and consistent manner. This non-GAAP measurement is not intended to replace the presentation of CDI's financial results in accordance with GAAP.

Churchill Downs Incorporated, headquartered in Louisville, Ky., owns and operates world-renowned horse racing venues throughout the United States. The Company's racetracks in California, Florida, Illinois, Indiana, Kentucky and Louisiana host 123 graded-stakes events and many of North America's most prestigious races, including the Kentucky Derby and Kentucky Oaks, Hollywood Gold Cup and Arlington Million. CDI racetracks have hosted nine Breeders' Cup World Thoroughbred Championships - more than any other North American racing company. CDI also owns off-track betting facilities and has interests in various television production, telecommunications and racing services companies that support CDI's network of simulcasting and racing operations. CDI trades on the Nasdaq National Market under the symbol CHDN and can be found on the Internet at http://www.churchilldownsincorporated.com .