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<SEC-DOCUMENT>0000020212-04-000033.txt : 20041022
<SEC-HEADER>0000020212-04-000033.hdr.sgml : 20041022
<ACCEPTANCE-DATETIME>20041022151346
ACCESSION NUMBER:		0000020212-04-000033
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20041020
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20041022
DATE AS OF CHANGE:		20041022

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHURCHILL DOWNS INC
		CENTRAL INDEX KEY:			0000020212
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-RACING, INCLUDING TRACK OPERATION [7948]
		IRS NUMBER:				610156015
		STATE OF INCORPORATION:			KY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-01469
		FILM NUMBER:		041091743

	BUSINESS ADDRESS:	
		STREET 1:		700 CENTRAL AVE
		CITY:			LOUISVILLE
		STATE:			KY
		ZIP:			40208
		BUSINESS PHONE:		5026364400

	MAIL ADDRESS:	
		STREET 1:		700 CENTRAL AVENUE
		STREET 2:		700 CENTRAL AVENUE
		CITY:			LOUIVILLE
		STATE:			KY
		ZIP:			40208
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>t8k3q04.htm
<DESCRIPTION>CONFERENCE CALL TRANSCRIPT OCTOBER 20, 2004
<TEXT>
<HTML>
<HEAD>
<TITLE>8-K Conference Call Transcript October 20, 2004</TITLE>
</HEAD>
<BODY>
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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
UNITED STATES<BR>SECURITIES AND EXCHANGE COMMISSION<BR>WASHINGTON, D.C. 20549 </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 8-K <BR><BR>
CURRENT REPORT<BR>
PURSUANT TO SECTION 13 OR 15(d) OF THE<BR>SECURITIES EXCHANGE
ACT OF 1934 <BR><BR>Date of Report (Date of earliest event reported): October 20, 2004 </FONT></H1>



<p align=center> <IMG SRC="smalllogo.gif"> </P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Exact name of registrant as specified in its charter)<BR><BR></FONT></TD></TR>

</table>
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<TR VALIGN="Top" ALIGN="Center">
        <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Kentucky</U><BR>
        (State or other jurisdiction of <BR>incorporation or organization)</FONT></TD>
        <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>0-1469</U><BR>(Commission File Number)</FONT></TD>
        <TD ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>61-0156015 </U><BR>
        (IRS Employer Identification<BR> No.)<BR><BR></FONT></TD>
</TR></TABLE>

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<TR VALIGN="Top" ALIGN="Center">
<TD COLSPAN="3" ALIGN="Center"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>700 Central Avenue, Louisville, Kentucky 40208 </U><BR>
         (Address of principal executive offices)<BR>
        (Zip Code)<BR><BR>
        <U>(502)-636-4400</U><BR>
        (Registrant&#146;s telephone number, including area code)<BR><BR>
        <U>Not Applicable</U><BR>
        (Former name or former address, if changed since last report) </FONT></td></TR>
</TABLE>
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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR><BR>

[ ]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<BR><BR>
</FONT></P>




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        <TD COLSPAN=3 ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" size=2>
               Page 1</FONT></TD>
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        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
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<H1 ALIGN=center><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CHURCHILL DOWNS INCORPORATED<BR><BR>
        INDEX<BR><BR> </FONT></H1>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=top>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 2.02</B></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Results of Operations and Financial Condition</B><BR><BR></FONT></TD></TR>
<TR VALIGN=top>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attached and incorporated herein by reference as
 Exhibit 99.1 is a copy of the earnings release conference call transcript, dated October 20, 2004, reporting the Registrant's financial
                  results for the third quarter of 2004.<BR><BR></FONT></TD></TR>
<TR VALIGN=top>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Item 9.01</B></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Financial Statements and Exhibits</B><BR><BR></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=10% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>.</FONT></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD WIDTH=5% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c)<BR><BR></FONT></TD>
     <TD WIDTH=80% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Exhibits<BR><BR></FONT></TD></TR>
<TR VALIGN=top>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;</FONT></TD>
     <TD colspan=2 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 99.1&nbsp;&nbsp;&nbsp;Earnings release conference call transcript
        dated October 20, 2004.<BR><BR></FONT></TD></TR>
</TABLE>
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        <TD COLSPAN=3 ALIGN="center"><FONT FACE="Times New Roman, Times, Serif" size=2>
               Page 2</FONT></TD>
</TR>
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        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
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<TABLE CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"><FONT SIZE="2">SIGNATURES<BR><BR></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.<BR><BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>CHURCHILL DOWNS INCORPORATED</B><BR><BR><BR><BR><BR></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">October 22, 2004 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>/s/Michael E. Miller</U></FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Michael E. Miller<BR>
                                                    Executive Vice President and<BR>
                                                    Chief Financial Officer<BR>
                                                    (Principal Financial and Accounting Officer)</FONT></TD></TR>
</TABLE>
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               Page 3</FONT></TD>
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        <TD COLSPAN=3 ALIGN="center"><HR SIZE=5 NOSHADE></TD>
</TR>
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<DESCRIPTION>CONFERENCE CALL TRANSCRIPT OCTOBER 20, 2004
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<BODY><P align=right><FONT face="Times New Roman, Times, Serif" size=2>CHURCHILL DOWNS INCORPORATED<BR>Moderator: Mike Ogburn<BR>10-20-04/8:00
 a.m. CT<BR>Confirmation # 825996<BR></FONT></P>

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<H1 align=center><FONT face="Times New Roman, Times, Serif" size=3>CHURCHILL DOWNS INCORPORATED</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1" FSL="Default" -->
<H1 align=center><FONT face="Times New Roman, Times, Serif" size=3>Moderator: Mike Ogburn <BR>October 20, 2004<BR>8:00 a.m. CT </FONT></H1>

<TABLE cellSpacing=0 cellPadding=0 width="100%">
<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator:</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good day, everyone, and welcome to the Churchill Downs Incorporated conference call. Today's call is being recorded.<BR><BR></FONT></TD></TR>
</TABLE>


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<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>At this time for opening remarks and introductions, I would like to turn the call over to Mr. Mike Ogburn, director of investor relations. Please go ahead, sir. </FONT></TD></TR>
</TABLE>

<BR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Mike Ogburn: </FONT></TD>
<TD><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning and welcome to this Churchill Downs Incorporated conference call to review the Company's results for
the third quarter of 2004.  The results were released yesterday afternoon in a press release that has been
covered by the financial media. </FONT></TD></TR>
</TABLE>
<BR>
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<TR vAlign=top>
<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>A copy of this release, announcing earnings and any other financial and statistical information about the period
to be presented in this conference call, including any information required by Regulation G, is available at the
section of the Company's Web site entitled "Investor Relations," located at churchilldownsincorporated.com.  Let
me also note a release has been issued advising of the accessibility of this conference call on a listen-only
basis over the Internet.</FONT></TD></TR>
</TABLE>

<BR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>As we start, let me express that some statements made in this call will be forward-looking statements, as defined
         in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that
         include projections, expectations or beliefs about future events or results, or otherwise are not
         statements of historical fact.  Actual performance of the Company may differ materially from that
         projected in such statements.
</FONT></TD></TR>
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<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Investors should refer to statements included in reports filed by the Company with the Securities and Exchange
Commission for a discussion of additional information concerning factors that could cause our actual results of
operations to differ materially from the forward-looking statements made in this call.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The information being provided today is of this date only and Churchill Downs Incorporated expressly disclaims
         any obligation to release publicly any updates or revisions to these forward-looking statements to
         reflect any changes in expectations.
</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>I&#146;ll now turn the call to Tom Meeker, president and chief executive officer.</FONT> </TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker: </FONT></TD>
<TD><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning everyone and thanks for joining us this morning to discuss our third quarter results.  As is
customary, during this morning's call, I'll make some general comments about the Company's performance and
following my comments, Mike Miller, our CFO, will fill you in on all the details.  Following Mike's comments,
we'll stand ready to answer any questions that you may have.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>As we informed you during our fourth quarter call in 2003, management approached 2004 as a year in which the
Company would reposition itself for future growth.  We projected that earnings would be flat, as we commenced a
number of projects, including CRM, Business Change Management and others, which, in the end, will ensure future
growth and profitability. </FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Moreover, we anticipated that our Churchill Downs racetrack meets, spring and fall, would suffer as we worked to
complete the rebuilding of the clubhouse and grandstand facilities under the Master Plan.  In short, we advised
the market that earnings growth would not be achievable in 2004.  However, as Mike will explain, other factors
have also had a material impact on our 2004 earnings.  As such, we have revised our guidance for the year-end. </FONT></TD></TR>
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<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>By all measurements, much was accomplished during the quarter.  Arlington Park staged a very successful meet,
with strong attendance and handle numbers, coupled with aggressive cost-containment efforts.  Despite hurricanes,
which resulted in the loss of three days of racing, Calder's performance continued to meet or exceed
expectations. </FONT></TD></TR>
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<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>However, these bright spots in operations were largely overshadowed by what was accomplished on the strategic
front.  The Master Plan redevelopment of Churchill Downs racetrack continued during the quarter and is well on
the road to completion for next year's Derby.  In fact, two floors of the clubhouse will be open during this fall
meet.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In addition, we have exceeded the sale of our PSLs (Personal Seat Licenses), a critical part of the overall
financing of the Master Plan.  To date, we have sold over $19 million in PSLs - that's $4 million more than was
in our plan.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>On October 15th, we completed the purchase of the Fair Grounds.  This strategic target affords Churchill Downs
Simulcast Network with a first quarter product, a critical need that has been identified for a number of years.
Moreover, this acquisition provides CDI with the opportunity to utilize alternative gaming revenues to strengthen
its racing programs.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In the short term, we have four objectives for the Fair Grounds.  First, strengthen the ties with the local
         community; second, reposition the racing program, which is well underway; third, improve the [video
         poker] operations, which are antiquated and are not performing in line with other [video poker]
         operations in Louisiana; and, fourth, deploy slot machines at the racetrack.  We are well on the way to
         completing each of these tasks.
</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The third quarter also saw us actively engaged in several legislative and ballot initiatives.  In California, CDI
         - together with Magna, Bay Meadows, Los Alamitos and several card clubs - promoted Proposition 68,
         which, among other things, would provide significant dollars to the state and prompt the Native
         Americans to pay their fair share of taxes.  In lieu of that, and in lieu of the Native Americans paying
         their fair share of taxes, the racetracks and the card clubs would get a compliment of slot machines.
</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Three weeks ago we ceased spending on this initiative, after the Attorney General changed the ballot
         language and, more important, the Native Americans overwhelmed the initiative with a costly television
         campaign.  While Proposition 68 remains on the ballot, polling indicates that it is unlikely that it
         will pass.  The failure of Proposition 68 is not the end to our efforts in California.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>To the contrary, we intend to pursue legal and legislative means to advance the racing industry's
         cause.  We believe that the efforts undertook with Proposition 68 have given the industry a seat at the
         table when reaching a global solution to the question of rationalizing the overall deployment of gaming
         in California.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In Florida, CDI - together with other pari-mutuel operators in Dade and Broward Counties - is
         promoting Amendment 4 as a means to provide much needed funding for education in the state and, at the
         same time, enabling the racing industry to better compete with the competition from Native American
         casinos.  Recently Magna joined in this effort and is assisting with funding.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Most important, however, the amendment has garnered the support of various statewide and local
         groups, including the Florida Education Association, the Florida Association of School Administrators
         and several union organizations, including the AFL-CIO and those representing the police.  For a more
         exhaustive list of supporters for the amendment go to our Web site at www.yesforlocalcontrol.com.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Based on daily polling done throughout the state, we are cautiously optimistic that the amendment
         will pass.  To date, we have spent $3.5 million on this effort and we did not anticipate any further
         expenditures in 2004.  However, if the amendment does pass, local referendums must be held in both Dade
         and Broward Counties.  These efforts would be undertaken in 2005.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Efforts are also underway to pass alternative gaming legislation in Kentucky, Indiana and Illinois.
         Just two days ago, an interim committee of the Indiana legislature passed out a recommended bill that
         would allow for pull-tabs at the racetracks in Indiana and at two off-track betting locations in
         Indianapolis and Fort Wayne.  This is a small step in the overall legislative effort, but it is one in
         the right direction.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>During the quarter, we continued to aggressively pursue our CRM objective.  We have developed a
         number of systems, products and platforms that will be deployed in 2005.  In addition, we have filled
         two key positions in the Company, vice president of human resources and vice president of technology.
         The advanced skills brought by these individuals will be critical to our overall success in the future.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>With that general overview, I'll turn the call over to Mike Miller, who will give all of the details
         concerning the quarter and our guidance for the year-end.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Michael Miller: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Thank you, Tom, and good morning everyone.  It has been an extremely busy quarter, but all in
         all a very positive one, given what we've accomplished.  As Tom mentioned, the consummation of the Fair
         Grounds acquisition, our investments in the California and Florida legislative initiatives, and even the
         impairment write down in Ellis Park, all of which impacted third quarter results, served to position us
         for future growth and renewed profitability. </FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>I'll focus my comments on operations to the third quarter of 2004, compared to that quarter in 2003,
         and then briefly highlight our balance sheet at the end of the third quarter.  I'll conclude my remarks
         by discussing the Fair Grounds, as well as the guidance for the full year.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>First, please turn your attention to the supplemental information by operating unit and focusing first
         on net revenues.  From a revenue standpoint, our consolidated revenues were down from 2003 by $1.8
         million.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2> The Kentucky operations enjoyed an increase, due to the decision to run six days per week at Ellis
         Park, instead of the customary five, but all other units reported decreases, primarily due to shifts in
         the racing calendar resulting in a combined nine fewer race days in 2004; coupled with the effects on
         Calder's business from the various hurricanes passing through Florida; along with a $500,000 one-time
         adjustment at Hoosier in the 2003 quarter related to riverboat subsidies.  The decrease in revenues from
         other investments was the result of our internalizing our closed-circuit TV operations, as we bought out
         our minority partner in Charleston Broadcast at the end of 2003.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The EBITDA story for the third quarter is slightly more complicated. In addition to the impact of lesser
         revenues, we recorded the asset impairment at Ellis of $6.2 million and we spent $5.1 million in
         California and Florida on the related referendums.  The balance of the total decrease is due to a number
         of factors, including CRM, increased expenses related to Sarbanes-Oxley compliance efforts and the
         disappointing results for the Ellis Park Meet.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The results of the Ellis Meet for this year, as well as looking ahead at the prospects for 2005,
         convinced us that it was necessary to once again look at the carrying value for both the fixed assets as
         well as the related goodwill for Ellis Park.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Looking at expected future cash flows from this asset and applying the guidance under the
         appropriate accounting pronouncements, it led us to the $6.2 million write-down.  We are now confident
         that the resulting carrying value will be fully supportable by ongoing operations.  And let me say - in
         advance of the inevitable question - let me state that we are not soliciting offers for Ellis currently
         and we're hopeful for a much better 2005.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Turning now to the statement of net earnings, the $14.1 million shortfall in EBITDA translated into
         a $14.6 million variance in our operating income, from a profit of $13.6 million in 2003 to a $1 million
         loss in 2004.  Depreciation in 2004 was slightly up over the prior year, primarily due to the Churchill
         Downs Master Plan, and our interest income was down 900,000 from last year, as a result of the recording
         in Q3 of 2003 the impact of a property tax refund in Illinois.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>In spite of what you might expect, we actually recorded an income tax expense for the quarter of
         $1.6 million, as opposed to a credit, given our loss.  This was due to the necessity of our revising our
         year-to-date effective tax rate to reflect the non-deductibility of the legislative initiative costs, as
         well as a portion of the impairment loss.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>This year-to-date impact was fully recorded in the third quarter.  Please also note that our loss
         per share of 29 cents was calculated on a basic, rather than a fully diluted basis, as is the norm when
         a loss is incurred.  That concludes my remarks on operations and now if you'll turn you attention to the
         balance sheet, I'd like to highlight just a few items.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The fluctuations in receivables, payables and accrued expenses are primarily due to timings of
         billings, purse settlements, et cetera, and are generally not indicative of any fundamental changes in
         the manner or level of operations.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>However, included in accounts receivable at the end of the quarter is approximately $9 million
         related to the PSL program, which Tom referred to, at Churchill Downs, which we rolled out in
         conjunction with the Master Plan.  This new program also accounts for the increase in deferred revenues,
         as we have billed in excess of $19 million, which will be amortized into revenue over a 30-year period.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The increase in other current assets is attributable to deposits and advances made in connection
         with the Fair Ground acquisition.  Plant and equipment reflects our expenditure at Churchill Downs
         racetrack for the Master Plan, which is on budget and on time, scheduled to be fully operational prior
         to the Spring Meet in 2005.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2> The decrease in income tax payable is a function both of timing and reduced taxable income, and a
         $39 million increase in long-term debt is primarily attributable to our capital expenditures and again,
         primarily the Master Plan at Churchill Downs.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>With respect to our long-term debt, coincident with the closing of the Fair Grounds, we amended both
         our revolver, as well as our senior note documents, to allow for the increased leverage we will
         experience in the near term as we invest nearly $90 million in New Orleans over the next few months.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>The impact of this is to increase our rate spreads immediately by approximately 125-basis points,
         which will be reflected in increased interest costs beginning in the fourth quarter of 2004.  This
         amendment also allows us sufficient access to capital to complete both the Fair Grounds investment, as
         well as to continue to pursue our other strategic objectives.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Looking ahead to the fourth quarter, we now project to produce sufficient earnings to bring our
         full-year results into the range of $1 to $1.05, as previously reported.  We expect our earnings -
         excuse me - we will benefit in the fourth quarter from the gain on the disposition of our shares in
         Kentucky Downs, boosting earnings in what traditionally is a fairly flat quarter.  This transaction
         allows us to monetize our currently non-performing asset, plus it provides for future contingent
         proceeds, should Kentucky adopt alternative gaming at racetracks.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Admittedly, there have been a lot of moving parts to our earnings this year, beginning in our first
         quarter guidance of $1.70 (year-end), and now looking roughly at $1.  But, we are pleased with our
         accomplishments and our position, particularly in light of the fact that the combined impact of the
         legislative initiatives and the Ellis impairment alone account for 76 cents of the difference.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>&nbsp; </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>That concludes my remarks and I'll now turn it back to the operator for questions.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Thank you.  The question-and-answer session will be conducted electronically.  If you would like to
         ask a question today, please do so by pressing the "star" key followed by the digit "one" on your
         touch-tone telephone. If you are using a speakerphone, please make sure your mute function is turned off
         to allow your signal to reach our equipment.  Once again if you do have a question, please press "star
         one" now.</FONT></TD></TR>
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<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>We'll go first to Tim Rice at Rice Voelker.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice:</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Good morning.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Morning, Tim.</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tim Rice:</FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>Well, I'm happy I don't have to ask any more about why you guys aren't buying the Fair Grounds.  First
         question involves the withholding on foreign bets.  Can you tell me if the elimination of that is going
         to have an immediate effect on your ability to simulcast outside of the U.S.?</FONT></TD></TR>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Tom Meeker: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>I don't know if it will be immediate, but that issue, coupled with a myriad of other issues, much
         like the issues that were confronted domestically - with such things as landing rights, the ability to
         get into various jurisdictions with a foreign signal - all have to be solved before we can fully deploy
         internationally.  But, the events that occurred, with respect to the withholding, were very positive.  I
         think it will take some time to solve the other problems related to international deployment.</FONT></TD></TR>
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<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Could you put that in any more specific of a timeframe, maybe by a year, or
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 <TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Yes, I think in '05 you'll start seeing some more
aggressive efforts by our Company, as well as others, to get into the international arena.  But, again, I would caution, much like what we found
         domestically, such as the events that occurred in both Louisiana and New Jersey - which,
essentially by          legislative enactment created sort of an insular position for
those two states - prohibited us, as well          as other providers, from getting into
those states. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  &nbsp;      </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>You've got much of that same type of problem, I should say, in foreign jurisdictions.  So, I think
         over the course of time, we'll have the same things that happened domestically,
such as approaching the          problems through reciprocity - that is by taking signals
from other jurisdictions into the U.S., which          we are doing in some instances,
like out in California, we'll be taking the Australian signal.  Those          types of
things will go a long way in developing the international relationships necessary to
fully          deploy internationally with the U.S. product. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tim Rice: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 And one question on California.  Can you tell me where the plans for a new Hollywood
Park stand at the          moment? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Well, I don't think we've announced a new Hollywood Park.  We continue to look at all of
our assets,          in terms of maximizing the value of those assets, and that's about
all I can say. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tim Rice: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay.  Thanks a lot. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operator:  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We'll go next to Samir Jain at Jefferies &amp; Company. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Hi.  You mentioned that the polling was ... </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> I'm sorry, we can't hear you. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> We can't hear you - please. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Can you hear me now? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Just barely. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Just barely. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Is that a little better now? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Yes. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Yes, thank you. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Okay, great.  You mentioned that the polling in Florida was looking favorable.  Do you
have any hard          numbers there? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 No.  All I can say is that our efforts continue in Florida, predicated on the polling
data that          we've down there. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay, okay.  And do you have any indications if the primary poll passes, how the county
polls are          looking?  Are you getting positive feedback there?  Do you figure if
you can get past the first hump          then the rest is ... </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Yes. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> I can give you that it looks positive there, but more important in the prior effort - I
think it was three or four years ago - Dade and Broward Counties had strong
support for the proposition that  ultimately failed statewide. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Great.  And then turning to the Fair Grounds, do you have an estimation of how many
machines might          go in there? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Well, it's actually a public record.  It will start out with 500 and then it can grow to
700,          dependant upon the growth of Harrah's in its downtown casino location. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Okay.  And the final question is have there been any developments in Kentucky or, you
know, maybe          Ohio, which would spur something in Kentucky, in terms of the gaming
front there?  I know we've heard          stuff about Governor Taft maybe ... </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> We continue to ... </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> ... office or ... </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> I'm sorry, I didn't hear the last ... </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Maybe something with the change in governor in Ohio, maybe, you know, acting as a
catalyst, you          know, in Ohio and then, you know, thereby acting as a catalyst in
Kentucky?  Anything like that or ... </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Male:  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I can't comment on that.  I mean virtually every racing state, in some form or another, the
participants          in racing - be they horseman, racetracks - are pursuing legislative
efforts in the area of alternative          gaming, and that holds true for each of the
states that we're doing business, including Florida,          California, which we've
commented on. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>And, in addition, you know, Illinois, Indiana and Kentucky, each has their own set of problems -         political
problems - but we will continue to pursue the effort aggressively, because it, in the
long          term, will be vitally important to our overall purse program in each of the
states where we do business. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Samir Jain: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay, great.  Thanks. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operator:  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>And as a reminder, please press star one if you have a question.  We'll go next to Ryan Worst
at C.L. King. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Good morning. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Hello Ryan. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Just a couple of questions.  When would you be able to deploy slot machines at the Fair
Grounds?          And could you also provide more detail on the spending - the
incremental spending for that acquisition,          up to $90 million - and where's that
money mostly going? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Yes - we'll take that in the two parts that you posed.  The "when" depends upon a
process that          we've already commenced now, and that is securing all the necessary
permits and licenses and going          through suitability, and so not all of that is
under our control.  We're working very diligently at          that.  We're working
closely with the authorities in Louisiana, but as to actually when that would be
         consummated, it's hard to tell. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>   &nbsp;            </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We also
want to work with the community very closely, and the business leaders of the community
         surrounding the Fair Grounds, to make sure we do this in a way that fits in well
with that          neighborhood.  So, you know, we're hopeful.  We're hopeful that that
happens in the near term, Ryan, but          not all that's under our control.  But, as
you might imagine, as soon as we can possibly deploy there we          will. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 With respect to the $90 million, there are a lot of pieces to that, as of public record
now.  We          spent $47 million to close with the debtor, and then we spent
approximately another $10 million to close          with the video poker operations,
which was a third party, and then with some OTBs (off-track betting          facilities),
which were owned by the Krantz family individually. So, you're roughly - when including
our          transaction costs - at about $60 million. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Right. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 The rest of the monies will be spent over the next few months, primarily with
improvements to the          backside that we've committed to the horsemen down there, as
well as the hopeful build-out of a          standalone slot operation there and the
purchase of the machines and more capital to be invested in the          video poker
business today. So, it'll probably not be fully spent until sometime toward the end of
'06. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay.  And could you talk about the profitability of those operations combined a little
bit? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Well, right now, we've got a lot of work to do down there.  We're expecting right now
that in 2005          the Fair Grounds in total, now some including racing and not all
alternative gaming, will be dilutive          and that will turn around in '06 and then
'07, particularly as the slots come on line. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 So are you including - when you says it's going to be dilutive '05 - are you including
slot revenue          in that analysis? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 No, we're not, because, again, at this point in time, I'm not sure exactly when the slot
revenue          will come on line. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Okay, fair enough.  And, Mike, do you have what the tax rate is going to be going
forward? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Michael Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 I don't have that yet, Ryan.  If not at a normal guidance in February, or if not before - we'll
         give you an effective tax rate. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Okay and then just one final question.  I joined the call late, so I apologize if I
missed this, but          could you go over the strategic benefits of selling your
portion of Kentucky Downs and also, you know,          more detail on the earn-out
provision and what exactly does that entail, if you could, and also what the
         gain from that would be in the fourth quarter? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Well, why did we do it?  Well, first of all, we only owned 24 percent of it.  As I think
we've          discussed before, this asset does not produce earnings, at this point, and
hasn't for some time, and          indeed we've contributed modest amounts of capital to
that over the past two years.  Brad Kelly, who is          a significant shareholder in
Churchill Downs, indicated it is an asset that he would like and has asked          us,
from time to time, to acquire more of.  He would like to get more control of that asset. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  &nbsp;              </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>So, as
we sit here today, our ability to monetize that asset, particularly when its not making
         money, and reducing our risk, with respect to capital contributions, makes a lot
of sense for us.  I'm          not going to disclose, at this point in time, the terms of
the contingent payout, but suffice to say, we          will get our fair share if indeed
slots come along. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Okay.  Was the impact of that 24-percent ownership - was there a significant impact on
the income          statement, or even a noticeable one? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> In the past you mean? </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Yes. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> No. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> No, it's a small loss every year and we just have our share of it, but it's not anything
you would          notice. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ryan Worst: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Okay.  Thank you. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Mike Miller: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> Thank you, Ryan. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Operator:  </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>And that concludes the question-and-answer session.
 Gentlemen, I'll turn the conference back over to you. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tom Meeker: </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
 Okay.  I want to thank everyone for joining us this morning.  I'm very pleased with what
was          accomplished during the quarter and what our team members were able to put
forth and the effort that          they put forth in doing all the things that have been
accomplished during the quarter. </FONT></TD>
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<TD WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>  &nbsp;</FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>And, again,
I reaffirm our belief that 2005, based upon what we have been able to accomplish in
         2004, will be back in line what we had historically done, in terms of growing
the Company.  So, with          that, again, thank you for joining us this morning.  I
look forward to talking to you next quarter. </FONT></TD>
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<TD width="15%"><FONT face="Times New Roman, Times, Serif" size=2>Operator: </FONT></TD>
<TD width="85%"><FONT face="Times New Roman, Times, Serif" size=2>And that will conclude today&#146;s conference.
Again, thank you for your participation. </FONT></TD></TR>
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<P align=center><FONT face="Times New Roman, Times, Serif" size=2>END </FONT></P>

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