Churchill Downs Incorporated Reports 2006 Second-Quarter Results

Churchill Downs Incorporated (NASDAQ: CHDN) (“CDI” or “Company”) today reported results for the second quarter and six months ended June 30, 2006.

Net earnings from continuing operations for the second quarter were $33.4 million, or $2.45 per diluted share, significantly higher than the $22.7 million, or $1.69 per diluted share, earned during the same period in 2005. Net revenues from continuing operations during the quarter totaled $175.0 million, an increase of 7.2 percent from net revenues of $163.2 million one year earlier. A record-breaking Kentucky Derby weekend at Churchill Downs racetrack, which also led to higher Churchill Downs Simulcast Network (“CDSN”) revenues; strong business levels at the Company’s Louisiana simulcast-wagering and video poker operations; and five additional days of live racing during the quarter contributed to the quarterly gains.

During the quarter, the Company also recorded $9.6 million of pre-tax net insurance recoveries stemming from storm-related damages sustained in 2005 at the Company’s Louisiana Operations, Calder Race Course and Ellis Park. Aside from the impact of these recoveries, the Company increased net earnings from continuing operations by 22.1 percent year over year.

Thomas H. Meeker, who will step down as CDI’s president and chief executive officer when Robert L. Evans assumes the position on Aug. 14, said he is pleased to transition to a new CEO at a time when the Company is enjoying positive momentum and is well positioned for the future. “We continue to be encouraged by the strong performance of our Company’s signature racing events as well as the strong business trends we are experiencing in Louisiana,” said Meeker. “We are quickly completing repairs to our storm-damaged facilities, including Fair Grounds Race Course, which reopens for live racing in November. Also, we recently negotiated a sales agreement for Ellis Park that allows the track to benefit from an independent operator while keeping the Ellis Park signal in our CDSN portfolio.

“While we are not changing our policy with respect to earnings guidance, we are heartened by our current year performance, particularly from the Kentucky Derby and in Louisiana. At this time, we expect that our earnings from continuing operations will equal or exceed the current average analyst estimate, even without the impact of our insurance recoveries.”

A conference call regarding this release is scheduled for Wednesday, Aug. 9, 2006, 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 www.churchilldownsincorporated.com or www.earnings.com, or by dialing (719) 457-2625 at least 10 minutes before the appointed time. The online replay will be available at approximately noon EDT and continue for two weeks. A two-week telephonic replay will be available two hours after the call ends by dialing (719) 457-0820 and entering 4261782 when prompted for the access code. A copy of this news release announcing quarterly results and relevant financial and statistical information about the period will be accessible at www.churchilldownsincorporated.com.

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. CDI’s six racetracks in Florida, Illinois, Indiana, Kentucky and Louisiana host many of North America’s most prestigious races, including the Kentucky Derby and Kentucky Oaks, Arlington Million, Princess Rooney Handicap, Louisiana Derby and Indiana Derby. CDI racetracks have hosted six Breeders’ Cup World Thoroughbred Championships. 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 Global Select Market under the symbol CHDN and can be found on the Internet at www.churchilldownsincorporated.com.

Information set forth in this news release contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the Act. The reader is cautioned that such forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Forward-looking statements are typically identified by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “should,” “will,” and similar words, although some forward-looking statements are expressed differently. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include: the effect of global economic conditions; the effect (including possible increases in the cost of doing business) resulting from future war and terrorist activities or political uncertainties; the economic environment; the impact of increasing insurance costs; the impact of interest rate fluctuations; the effect of any change in our accounting policies or practices; the financial performance of our racing operations; the impact of gaming competition (including lotteries and riverboat, cruise ship and land-based casinos) and other sports and entertainment options in those markets in which we operate; the impact of live racing day competition with other Florida and Louisiana racetracks within those respective markets; costs associated with our efforts in support of alternative gaming initiatives; costs associated with Customer Relationship Management initiatives; a substantial change in law or regulations affecting pari-mutuel and gaming activities; a substantial change in allocation of live racing days; litigation surrounding the Rosemont, Illinois, riverboat casino; changes in Illinois law that impact revenues of racing operations in Illinois; a decrease in riverboat admissions subsidy revenue from our Indiana operations; the impact of an additional Indiana racetrack and its wagering facilities near our operations; our continued ability to effectively compete for the country’s top horses and trainers necessary to field high-quality horse racing; our continued ability to grow our share of the interstate simulcast market; our ability to execute our acquisition strategy and to complete or successfully operate planned expansion projects; our ability to successfully complete any divestiture transaction; our ability to adequately integrate acquired businesses; market reaction to our expansion projects; the loss of our totalisator companies or their inability to provide us assurance of the reliability of their internal control processes through Statement on Auditing Standards No. 70 audits or to keep their technology current; the need for various alternative gaming approvals in Louisiana; our accountability for environmental contamination; the loss of key personnel; the impact of natural disasters, including Hurricanes Katrina, Rita and Wilma on our operations and our ability to adjust the casualty losses through our property and business interruption insurance coverage; any business disruption associated with a natural disaster and/or its aftermath; and the volatility of our stock price.