AGREEMENT REGARDING PARTICIPATION AGREEMENT

        THIS AGREEMENT REGARDING PARTICIPATION AGREEMENT (this “Agreement”) is
made and entered into as of the 6th day of May, 2004, between CHURCHILL DOWNS
MANAGEMENT COMPANY, a Kentucky corporation (“Lead”), and CENTAUR RACING, LLC, an
Indiana limited liability company (“Participant”).

        WHEREAS, Lead and Participant are parties to a Participation Agreement
dated as of December 3, 2001 (the “Original Participation Agreement”);

        WHEREAS, Borrower requested and Lead has agreed to extend the Loan
Maturity Date (as that term is defined in the Construction Loan Agreement)
pursuant to the terms of [i] Third Agreement Regarding Construction Loan and
Permanent Financing Agreement, Collateral Assignment of Contract, Note and Other
Matters (the “May 6, 2004 Agreement”), [ii] Third Agreement Amending Mortgage,
Assignment of Rents, Security Agreement and Fixture Filing (Madison County
Property) (the “Third Amendment”), [iii] Agreement Amending Mortgage, Assignment
of Rents, Security Agreement and Fixture Filing (Allen County Property) (the
“Allen County Amendment”), and [iv] Agreement Amending Mortgage, Assignment of
Rents, Security Agreement and Fixture Filing (Lake County Property) (the “Lake
County Amendment;” the Third Amendment, the Madison County Amendment, the Allen
County Amendment and the Lake County Amendment collectively are referred to in
this Agreement as the “Amendment Documents”), all dated as of the date hereof by
and between Lead and Borrower;

        WHEREAS, Lead and Participant desire to enter into this Agreement to
modify the Participation Agreement to recognize the execution and delivery of
the Amendment Documents;

        NOW THEREFORE, Lender and Borrower have agreed and do agree as follows:

ARTICLE 1
THE PARTICIPATION AGREEMENT

        1.1       All defined terms set forth in the Participation Agreement
shall have the meanings set forth in the Original Participation Agreement as
well as amended by this Agreement.

        1.2      The Original Participation Agreement is hereby amended as set
forth below:

A.  

Section 1 is amended by deleting the entirety of the current text of Section 1
and inserting new text for Section 1 reading in its entirety as follows:

    Page 1

--------------------------------------------------------------------------------

1.          The Participation. As partial consideration for the purchase price
paid by Participant pursuant to the Purchase Agreement, the Lead hereby grants
and the Participant hereby accepts a fifteen percent (15%) (which, when added to
the Conseco Participation acquired by Participant gives Participant a
twenty-five percent (25%) participation) (the twenty-five percent (25%)
participation is the “Participation Percentage”) undivided participation
interest in the loan (the “Loan”) heretofore made by the Lead to Hoosier Park,
L.P. (the “Borrower”) pursuant to (A) the Construction Loan and Permanent
Financing Agreement, dated September 30, 1993, between API and the Lead (the
“Construction Loan Agreement”), as assumed by the Borrower pursuant to (i) the
Hoosier Park Agreement of Limited Partnership dated August 30, 1994 (as amended)
and (ii) the Assumption Agreement, dated August 30, 1994, executed by the
Borrower in favor of API (the “Assumption Agreement”), and as amended by (i) the
Agreement Regarding Construction Loan and Permanent Financing Agreement,
Mortgage, Collateral Assignment of Contract and Other Matters, dated January 31,
1994, between API and the Lead (the “January 31, 1994 Agreement”), (ii) the Loan
Extension Agreement, dated June 1, 1994, between API and the Lead (the
“Extension Agreement”), (iii) the Second Agreement Regarding Construction Loan
and Permanent Financing Agreement, Collateral Assignment of Contract and Other
Matters dated as of November 30, 1995, between the Borrower and the Lead
(“November 30, 1995 Agreement”), and (iv) the Third Agreement Regarding
Construction Loan and Permanent Financing Agreement, Collateral Assignment of
Contract, Note and Other Matters dated as of May 6, 2004, between the Borrower
and the Lead (“May 6, 2004 Agreement”) and (B) the Second Amended Secured
Promissory Note, dated November 1, 1994, by Borrower in favor of the Lead in the
face principal amount of $28,700,000, as amended by the May 6, 2004 Agreement
(as so amended, the “Note”). The Loan is secured pursuant to (A) the Collateral
Assignment of Contracts, dated September 30, 1993, between API and the Lead (the
“Collateral Assignment”), as assumed by the Borrower pursuant to the Assumption
Agreement and as amended by the January 31, 1994 Agreement, the November 30,
1995 Agreement, and the May 6, 2004 Agreement, (B) the Mortgage, Assignment of
Rents, Security Agreement and Fixture Filing, dated September 30, 1993, between
API and the Lead (the “Mortgage”), as assigned to the Borrower pursuant to the
Assumption Agreement and the Assignment and Assumption of Rents, Security
Agreement and Fixture Filling and Consent to Assignment dated August 30, 1994,
executed by the Borrower in favor of API (which

    Page 2

--------------------------------------------------------------------------------

 

was consented to by the Lead and accepted by the Borrower pursuant to agreements
dated August 30, 1994) (collectively the “Mortgage Assignments”) and as amended
by (i) the January 31, 1994 Agreement, (ii) the Second Agreement Amending
Mortgage, Assignment of Rents, Security Agreement and Fixture Filing, dated as
of November 30, 1995, between the Lead and the Borrower (the “Second Amendment”)
and (iii) the Third Agreement Amending Mortgage, Assignment of Rents, Security
Agreement and Fixture Filing, dated as of May 6, 2004, between the Lead and the
Borrower (the “Third Amendment”); (C) the Mortgage, Assignment of Rents,
Security Agreement and Fixture Filing, dated November 30, 1995, between Borrower
and the Lead, as amended by that certain Agreement Amending Mortgage, Assignment
of Rents, Security Agreement and Fixture Filing (the “Allen County Amendment”),
dated as of May 6, 2004, between the Lead and the Borrower (as so amended, the
“Allen County Mortgage”); (D) the Mortgage, Assignment of Rents, Security
Agreement and Fixture Filing, dated November 30, 1995, between Borrower and the
Lead as amended by that certain Agreement Amending Mortgage, Assignment of
Rents, Security Agreement and Fixture Filing (the “Lake County Amendment”),
dated as of May 6, 2004, between the Lead and the Borrower (as so amended, the
“Lake County Mortgage”); (E) the API Pledge Agreement, dated August 30, 1994,
between API and the Lead, as amended by that certain First Amendment to API
Pledge Agreement dated as of May 31, 1996, between API and the Lead (as so
amended, the “API Pledge”); (F) the Pegasus Pledge Agreement, dated August 30,
1994, between Pegasus Group, Inc., an Indiana corporation and the Lead (the
“Pegasus Pledge Agreement”); (G) the Conseco Pledge Agreement, dated May 31,
1996 between Conseco and the Lead (the “Conseco Pledge Agreement”) and (H) the
Centaur Racing, LLC Amended and Restated Pledge Agreement, dated December 3,
2001, between Participant and the Lead (the “Centaur Pledge”). The Construction
Loan Agreement, the Assumption Agreement, the January 31, 1994 Agreement, the
Extension Agreement, the November 30, 1995 Agreement, the May 6, 2004 Agreement,
the Note, the Collateral Assignment, the Mortgage, the Mortgage Assignments, the
Second Amendment, the Third Amendment, the Allen County Mortgage, the Lake
County Mortgage, the API Pledge Agreement, the Pegasus Pledge Agreement, the
Conseco Pledge Agreement, and the Centaur Pledge Agreement (collectively,
together with any other documentation evidencing the Loan and any security
therefor, the “Loan Documents”), copies of which have been provided to the
Participant by the Lead.

    Page 3

--------------------------------------------------------------------------------

ARTICLE 2
MISCELLANEOUS

        2.1       Except as specifically modified hereby, the Original
Participation Agreement shall continue in full force and effect, unmodified and
unamended. This Agreement shall not constitute a novation of the right, duties,
obligations or liabilities of Lead, Participant, or any other party pursuant to
such document.

        2.2      This Agreement shall be binding upon Lead and Participant and
their respective successors and assigns.

        2.3       Lead and Participant acknowledge and agree that no event of
default, and no condition or event which, with the passage of time and/or the
giving of notice, could become an event of default under the Original
Participation Agreement currently exists.

        IN WITNESS WHEREOF, Lead and Participant have executed this Agreement
effective as of the above date, but actually on the dates set forth below.

  LEAD:

CHURCHILL DOWNS MANAGEMENT COMPANY

By: /s/Vicki L. Baumgardner

Vice President, Finance & Administration

May 5, 2004

PARTICIPANT:

CENTAUR RACING, LLC

By: /s/Jeffrey M. Smith

CEO, Racing Operation

May 5, 2004

Page 4

--------------------------------------------------------------------------------