Churchill Downs Incorporated Files Lawsuit Against Jockeys' Guild

Churchill Downs Incorporated ("CDI" or "Company") (NASDAQ: CHDN) today filed suit in U.S. District Court, Western District of Kentucky, seeking injunctions that would restrain and prohibit the Jockeys' Guild ("Guild") and its representatives from boycott and price-fixing activities in violation of the Sherman Act and KRS 367.175(1).

The lawsuit asks the court to find the Guild's activities on Nov. 7, 2004, at Churchill Downs and Nov. 12, 2004, at Hoosier Park illegal and in violation of anti-trust laws. In each instance, the Guild directed jockey boycotts aimed at disrupting business at a CDI facility. The Nov. 12 action at Hoosier resulted in the cancellation of the race card and the issuance of admission and program refunds to patrons.

The lawsuit also seeks damages as a result of the Guild's illegal activities and the resulting financial impact at Churchill Downs and Hoosier Park.

"Since the November incidents, it has become evident that the Guild orchestrated these boycott activities as a means to hurt our business," said Andrew G. Skehan, chief operating officer of Churchill Downs Incorporated. "We believe the evidence will compel the court to declare such activities illegal and provide CDI and its operations injunctive relief to prevent future boycotts.

"We are hopeful that the course of action we've announced today will provide assurances ahead of our upcoming meets and send a clear message to the current Guild management that its irresponsible activities are illegal and not in the best interests of its member jockeys or the industry."

Skehan pointed out that jockeys are private contractors and not employees of CDI or any of its operations. As independent contractors, they cannot by law boycott or conduct activities to disrupt the Company's business. Evidence of violations of the law include the following activities by the Guild and its representatives relating to the November incidents:

  • Interfering with the operations of CDI and its subsidiaries;
  • Encouraging or coercing others not to provide jockey services; and
  • Advising Guild members to engage in activities prohibited by anti-trust laws.

The Guild and its representatives publicly stated that their actions were taken to pressure the racetracks to provide higher on-track medical insurance. CDI racetracks voluntarily provide $100,000 on-track coverage to jockeys, and the Company is currently working with the NTRA and industry partners to fund a $1 million coverage plan. Up until 2002, the Guild had provided supplemental on-track coverage for jockeys, funded by racetrack contributions. Despite these racetrack contributions, the Guild allowed the supplemental coverage to lapse.

CDI also announced today that it will cease its voluntary "per starter fee" and "per race day" contributions currently paid to the Jockeys' Guild. In the past, those moneys were thought to be used for the Guild's supplementary on-track accident insurance. Guild management has ignored requests by CDI for an accounting of these fees and other contributions. On average, CDI contributes approximately $375,000 per year to the Guild through such fees.

"We need to be certain that moneys contributed on behalf of jockeys are spent on behalf of jockeys," said Skehan. "Since the Guild cannot or will not explain where this money is going, we are withholding this funding and exploring possibilities for redirecting it in a manner that would be beneficial to the jockeys. We also have a fiduciary responsibility to our shareholders, and as such it would be imprudent to continue funding an organization that is acting illegally to harm our business."

Churchill Downs Incorporated, headquartered in Louisville, Ky., owns and operates world-renowned horse racing venues throughout the United States. The Company's seven racetracks in California, Florida, Illinois, Indiana, Kentucky and Louisiana host 121 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 www.churchilldownsincorporated.com.