Churchill Downs Revises Earnings Forecast

LOUISVILLE, Kentucky – (PRESS RELEASE) -- Churchill Downs Incorporated ("CDI" or the "Company") (Nasdaq: CHDN) today announced that it is revising its earnings outlook for the third quarter of 2004 and further lowering its outlook for the full year to reflect increased spending on alternative gaming efforts and special, non-cash impairment charges for Ellis Park due to softness in business at that racetrack. The Company now expects results for the third quarter to be a loss of $0.29 per share, below the earnings range of $0.33 to $0.38 per share estimated during the second quarter earnings call in July. Earnings for the year, factoring in the third quarter charges of $0.34 at Ellis Park, are projected to be approximately $1.00 to $1.05 per share, compared to the previously revised year-end range of $1.44 to $1.53 per share.

"As we advised in July, strategic initiatives such as our alternative gaming efforts might require additional, non-deductible legislative expenses, the extent of which continues to be contingent upon the efforts' prospects and need," said Thomas H. Meeker, CDI's president and chief executive officer. "The ballot initiatives in California and Florida, which are key growth opportunities for the Company, required higher than projected spending levels, some of which were moved forward into the third quarter versus the fourth. Our decision to increase our investment, a possibility we discussed publicly in July, is one of two key factors that triggered our third quarter loss.

"The second factor, the impairment charges that total $6.2 million for Ellis Park, reflects our reassessment of that operation following the completion of its disappointing meet in September," continued Meeker. "After careful review, we determined that we needed to adjust the carrying value of the asset. We will continue to evaluate viable options that offer the racetrack the greatest opportunity for long-term success.

"Looking at our full-year guidance, the new estimate of approximately $1.00 to $1.05 per share factors in the full-year impact of an estimated $0.42 in increased spending on alternative gaming ballot referenda in California and Florida as well as the $0.34 in charges for Ellis Park," Meeker added. "Going forward, we are confident that these decisions made in 2004, though unfavorable to short-term earnings, will reposition our Company to achieve growth and build shareholder value in 2005 and many years to come."

Alternative gaming initiatives, Ellis Park and other factors contributing to the Company's earnings outlook will be discussed in more detail during the Company's third quarter conference call, scheduled for Wednesday, Oct. 20, 2004, beginning at 9:00 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 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 news release disclosing the revised earnings forecast will be accessible at http://www.churchilldownsincorporated.com/investor_relations .