##### Table of Contents





United States

Securities and Exchange Commission

Washington, D.C. 20549





Form 10-K





Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2008

Commission file number 1-11929





Dover Motorsports, Inc.

(Exact name of registrant as specified in its
charter)







|                                              |  |                                    
|--------------------------------------------- |  | -----------------------------------
|Delaware                                      |  | 51-0357525                         
|(State or other jurisdictionof incorporation) |  | (I.R.S. EmployerIdentification No.)

1131 North DuPont Highway, Dover, Delaware 19901

(Address of principal executive offices)

(302) 883-6500

(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



|                             |  |                                     
|---------------------------- |  | ------------------------------------
|Title of Class               |  | Name of Exchange on Which Registered
|Common Stock, $.10 Par Value |  | New York Stock Exchange             

Securities registered pursuant to Section 12(g) of the Act: None.





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes   ̈    No  x

Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ̈     Accelerated filer  x    Non-accelerated filer   ̈    Smaller reporting company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ̈    No  x

The aggregate market value of
common stock held by non-affiliates of the registrant was $74,538,164 as of June 30, 2008 (the last day of our most recently completed second quarter).

As of February 27, 2009, the number of shares of each class of the registrants common stock outstanding is as follows:



|                       |  |                  
|---------------------- |  | -----------------
|Common Stock -         |  | 18,122,996 shares
|Class A Common Stock - |  | 18,510,975 shares

Documents Incorporated by Reference

Portions of the registrants Proxy Statement in connection with the Annual Meeting of Stockholders to be held April 29, 2009 are incorporated
by reference into Part III, Items 10 through 14 of this report.









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Part I

References in this document to we, us and our mean Dover Motorsports, Inc. and/or its wholly owned subsidiaries, as appropriate.



|Item 1. | Business
|------- | --------

Dover Motorsports, Inc. is a public holding company that is a leading marketer and promoter of motorsports entertainment in the United States. Our motorsports subsidiaries operate four motorsports tracks in three
states and we promoted 15 major events during 2008 under the auspices of three of the premier sanctioning bodies in motorsportsthe National Association for Stock Car Auto Racing (NASCAR), the Indy Racing League (IRL)
and the National Hot Rod Association (NHRA). We own and operate Dover International Speedway® in Dover, Delaware; Gateway International Raceway® near St. Louis, Missouri; Memphis Motorsports Park® in Memphis, Tennessee; and Nashville Superspeedway® near Nashville, Tennessee.

In 2008, we promoted the following major events:



| |  |  | 2 NASCAR Sprint Cup Series events;
| | - |  | ----------------------------------

| |  |  | 6 NASCAR Nationwide Series events;
| | - |  | ----------------------------------

| |  |  | 4 NASCAR Camping World Truck Series events (formerly known as Craftsman Truck Series);
| | - |  | --------------------------------------------------------------------------------------

| |  |  | 1 IRL event; and
| | - |  | ----------------

| |  |  | 2 NHRA events.
| | - |  | --------------

Additionally, we
promoted a NASCAR Camping World East Series (formerly known as Busch East Series) event at Dover International Speedway in connection with our September NASCAR event weekend.

We derive a substantial portion of our revenues from admissions, event-related and broadcasting revenues attributable to our NASCAR-sanctioned events at
Dover International Speedway which were held in June and September for all years presented in these consolidated financial statements. Total revenues from these events were approximately 70% of total revenues for each of the years in the three year
period ended December 31, 2008.

For the 2009 race season, we will no longer promote an IRL event.

We generate revenues primarily from the following sources:



| |  |  | ticket sales;
| | - |  | -------------

| |  |  | rights fees obtained for television and radio broadcasts of our events and ancillary rights fees;
| | - |  | -------------------------------------------------------------------------------------------------

| |  |  | sponsorship payments;
| | - |  | ---------------------

| |  |  | luxury suite rentals;
| | - |  | ---------------------

| |  |  | hospitality tent rentals and catering;
| | - |  | --------------------------------------

| |  |  | concessions and souvenir sales and vendor commissions for the right to sell concessions and souvenirs at our facilities;
| | - |  | ------------------------------------------------------------------------------------------------------------------------

| |  |  | expo space rentals; and
| | - |  | -----------------------

| |  |  | track rentals and other event-related revenues.
| | - |  | -----------------------------------------------

We began our motorsports operations in 1969 in Dover, Delaware. Our predecessor, Dover Downs, Inc., was also engaged in harness horse racing operations and later ran our other gaming
operations. As a result of several restructurings, our operations were segregated into two main operating subsidiaries  Dover International Speedway, Inc., incorporated in 1994, encompassed our motorsports operations,
and Dover Downs, Inc., incorporated in 1967, conducted our gaming operations.



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Effective March 31, 2002, we spun-off our gaming business which was then owned by our
subsidiary, Dover Downs Gaming & Entertainment, Inc. (Gaming). On a tax-free basis, we made a pro rata distribution of all of the capital stock of Gaming to our stockholders. Our continuing operations
subsequent to the spin-off consist solely of our motorsports activities.

Our wholly-owned subsidiary, Midwest Racing, Inc.
(Midwest Racing), entered into a stock purchase agreement dated January 28, 2009, to sell Memphis Motorsports Park to Gulf Coast Entertainment, L.L.C (Gulf Coast). Under the terms of the agreement, Midwest Racing will
sell all of the stock of its wholly-owned subsidiary, Memphis International Motorsports Corporation, the owner of Memphis Motorsports Park, to Gulf Coast for $10,000,000 in cash and a two percent non-dilutable interest in Gulf Coast. Gulf Coast is
the owner of Alabama Motorsports Park, a proposed multi-use entertainment complex expected to be constructed in Mobile, Alabama. Closing is expected to take place on or before April 30, 2009 and is subject to financing and customary closing
conditions. In March 2009, we received a $100,000 non-refundable deposit towards the purchase price.

We promoted 1 NASCAR Nationwide
Series event, 1 NASCAR Camping World Truck Series event and 1 NHRA event in 2008 at our Memphis location. Although we will no longer own the Memphis facility after the close of the sale, we expect to enter into an agreement with Gulf Coast to
provide management services for the Memphis and Alabama facilities.

Dover International Speedway

We have promoted NASCAR-sanctioned racing events for 40 consecutive years at Dover International Speedway and currently promote five major
NASCAR-sanctioned events at the facility annually. Two races are in the NASCAR Sprint Cup Series professional stock car racing circuit, two races are in the NASCAR Nationwide Series racing circuit and one race is in the Camping World Truck Series
racing circuit. Both NASCAR Sprint Cup Series events at Dover are scheduled to be broadcast on network television in 2009.

Each of the
NASCAR Nationwide Series events and the Camping World Truck Series event at Dover International Speedway are conducted on the days before a NASCAR Sprint Cup Series event. Dover International Speedway is one of only eight speedways in North America
that presents two NASCAR Sprint Cup Series events and two NASCAR Nationwide Series events each year. Additionally, it is one of only eight tracks to host three major NASCAR events at one facility on the same weekend. The June and September dates
have historically allowed Dover International Speedway to hold the first and last NASCAR Sprint Cup Series events in the Maryland to Maine region each year. Our September event is the second of ten races in the Chase for the NASCAR Sprint
Cup which determines the NASCAR Sprint Cup Series champion for the racing season.

Dover International Speedway, widely known as the Monster Mile®, is a high-banked, one-mile, concrete superspeedway with permanent seating capacity of approximately
135,000. Unlike some superspeedways, substantially all grandstand and skybox seats offer an unobstructed view of the entire track. The concrete racing surface makes Dover International Speedway the only concrete superspeedway (one mile or greater in
length) that conducts NASCAR Sprint Cup Series events. The superspeedway facility also features the Monster Bridge® which debuted at our June 2004 NASCAR event weekend. The climate
controlled bridge spans across the width of the superspeedway at a height of 29 feet and houses 50-luxury seats, a refreshment bar and other amenities. The Monster Bridge is the only one of its kind in the motorsports industry and has been patented.

Gateway International Raceway

Gateway
International Raceway (Gateway) promoted three major events in 2008  a NASCAR Nationwide Series event, a NASCAR Camping World Truck Series event and an NHRA national event. The facility also hosts a number of regional and national
touring events, as well as weekly events on its drag strip and road course rentals.

The auto racing facility includes a 1.25-mile paved
oval track with 54,000 permanent seats, a nationally renowned drag strip capable of seating approximately 30,000 people and a road course. The facility, which is equipped with lights for nighttime racing, is located just across the Mississippi River
in Madison, Illinois, within view of the Gateway Arch in St. Louis.



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Memphis Motorsports Park

Memphis Motorsports Park (Memphis) promoted three major events in 2008  a NASCAR Nationwide Series event, a NASCAR Camping World Truck Series event and an NHRA national event. The facility also
hosted a number of regional and national touring events, as well as weekly events on its drag strip and road course rentals.

The auto
racing facility includes a 0.75-mile paved tri-oval track with approximately 20,000 permanent seats and a nationally renowned drag strip capable of seating approximately 25,000 people. The facility is located approximately 10 miles northeast of
downtown Memphis, Tennessee.

Nashville Superspeedway

In April 2001, we opened Nashville Superspeedway (Nashville)  a motorsports complex approximately 30 miles from downtown Nashville in Wilson County, Tennessee. The 1.33-mile concrete superspeedway
has 25,000 permanent grandstand seats with an infrastructure in place to expand to 150,000 seats as demand requires. Additionally, construction included lights at the superspeedway to allow for nighttime racing and the foundation work for a dirt
track, short track and drag strip, which may be completed in the future. Nashville Superspeedway promoted two NASCAR Nationwide Series events, a NASCAR Camping World Truck Series event and an IRL event during the 2008 season. The facility also
hosted other regional and national touring events, as well as track rentals.

Agreements with NASCAR

Sanction agreements are entered into with NASCAR on an annual basis. Pursuant to the typical NASCAR sanction agreement, NASCAR grants its sanction to a
promoter, such as Dover International Speedway, to organize, promote and hold a particular competition. The promoter sells tickets to the competition, sells or arranges for the sale of merchandise and concessions, and sells advertising, sponsorships
and hospitality services. NASCAR conducts the competition, arranges for the drivers, and has sole control over the competition, including the right to require alterations to the promoters facility and the right to approve or disapprove any
advertising or sponsorship of the promoter. NASCAR also has exclusive rights to exploit live broadcast and certain broadcast and intellectual property rights related to the competition, and exclusive rights to sponsorship and promotional rights
relative to the series to which a particular competition belongs. The promoter must pay the sanction fee and purse monies and receives a share of the live broadcast revenue contracted for by NASCAR. The promoter is responsible for the condition of
the facility, for compliance with laws, for control of the public, for fire and medical equipment and personnel, for security, for insurance and for providing facilities and services required by NASCAR officials and the live broadcast personnel.

Dover International Speedway, Inc. has entered into two sanction agreements with NASCAR pursuant to which it will organize and promote two
NASCAR Sprint Cup Series events in 2009. Our business is substantially dependent on these two agreements. The economic terms of these two agreements are as follows: Total purse and sanction fee to be paid$6,150,000 for the May event
and $5,539,000 for the September event. Estimated live broadcast revenue to be received$12,297,000 for the May event and $10,185,000 for the September event. Live broadcast revenue figures are based on the
assumption that all events on the 2009 NASCAR Sprint Cup Series schedule take place and that all promoters will be entitled to their respective percentage allocations as set by NASCAR. Dover International Speedway is also
entitled to share, along with other promoters, in income which NASCAR derives from certain ancillary media rights. Revenue for such rights attributable to Dover International Speedways 2008 NASCAR Sprint Cup Series competitions
amounted to approximately $800,000 and we reasonably anticipate that this will approximate the amount we will receive for our 2009 events.



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Our other tracks have also entered into sanction agreements with NASCAR for the 2009 season. We enter
into these and other sanction agreements in the ordinary course of our business. The following is a list of sanction agreements that we have with NASCAR for 2009:



|                                              |  |                                   |  |                   
|--------------------------------------------- |  | --------------------------------- |  | ------------------
|Subsidiary                                    |  | Event                             |  | Date              
|Dover International Speedway, Inc.            |  | NASCAR Sprint Cup Series          |  | May 31, 2009      
|                                              |  | NASCAR Nationwide Series          |  | May 30, 2009      
|                                              |  | NASCAR Camping World Truck Series |  | May 29, 2009      
|                                              |  | NASCAR Sprint Cup Series          |  | September 27, 2009
|                                              |  | NASCAR Nationwide Series          |  | September 26, 2009
|                                              |  | NASCAR Busch East Series          |  | September 25, 2009
|                                              |  |                                  
|Nashville Speedway, USA, Inc.                 |  | NASCAR Nationwide Series          |  | April 11, 2009    
|                                              |  | NASCAR Nationwide Series          |  | June 6, 2009      
|                                              |  | NASCAR Camping World Truck Series |  | August 1, 2009    
|                                              |  |                                  
|Memphis International Motorsports Corporation |  | NASCAR Nationwide Series          |  | October 24, 2009  
|                                              |  | NASCAR Camping World Truck Series |  | June 27, 2009     
|                                              |  |                                  
|Gateway International Motorsports Corporation |  | NASCAR Nationwide Series          |  | July 18, 2009     
|                                              |  | NASCAR Camping World Truck Series |  | September 12, 2009

Impairment Charges Recorded in 2008

Based upon the current economic conditions and their impact on our current and projected operations and cash flows, and the potential impact on land real
estate valuations, combined with the fact that there was no change in the allocation of broadcast revenues to the NASCAR Nationwide Series for 2009 (see Impairment Charges Recorded in 2006 below for further discussion), we concluded in the fourth
quarter that it was necessary for us to review the carrying value of the long-lived assets of each of our Midwest facilities, consisting of Nashville, Memphis and Gateway, for impairment. In accordance with FASB Statement No. 144, the
recoverability of assets to be held and used was measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. As a result of the recoverability test, we concluded
that the carrying amount of each of our Midwest facilities exceeded the undiscounted cash flows.

Since the carrying amount of the assets
exceeded the fair value, an impairment charge was recognized by the amount by which the carrying amount of the assets exceeded the fair value. Fair value of the assets for the Nashville and Gateway facilities was determined using a valuation
methodology that consisted of the cost approach, which gave specific consideration to the value of the land plus contributory value to the improvements, and the comparable sales approach. Based upon the cost approach utilized for the valuations,
there is an assumption that these two facilities will continue to operate as racetracks and it is our intention to continue operating them unless it is determined that future prospects no longer justify such action. Fair value of the assets for
Memphis was determined using a valuation methodology that considered the terms of the stock purchase agreement with Gulf Coast and the comparable sales approach. The long-lived assets deemed to be impaired consisted of track facilities. These
facilities generated negative cash flows for several years and we expect that these negative cash flows will continue as we monitor industry and Nationwide series changes made by NASCAR while continuing to reduce operating expenses and increase
revenues.



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Based on the results of this analysis, we recorded non-cash impairment charges in 2008 to write-down the
carrying value of long-lived assets at our Midwest facilities to fair value, as follows:



|          |  |                                    |            |                                |   |                            |  |   |           
|--------- |  | ---------------------------------- | ---------- | ------------------------------ | - | -------------------------- |  | - | ----------
|          |  | Carrying Value ofLong-Lived Assets |            | Fair Value ofLong-Lived Assets |   | Non-CashImpairment Charges
|Nashville |  | $                                  | 54,640,000 |                                | $ | 51,500,000                 |  | $ | 3,140,000 
|Memphis   |  |                                    | 12,150,000 |                                |   | 10,000,000                 |  |   | 2,150,000 
|Gateway   |  |                                    | 17,505,000 |                                |   | 10,000,000                 |  |   | 7,505,000 
|          |  |                                    |            |                                |   |                            |  |   |           
|Total     |  | $                                  | 84,295,000 |                                | $ | 71,500,000                 |  | $ | 12,795,000
|          |  |                                    |            |                                |   |                            |  |   |           

Impairment Charges Recorded in 2006

Approximately one-third of our revenues are derived from the broadcast rights received through the arrangements that NASCAR has made with various
broadcast media. In October of 2006, NASCAR informed us of the amount of live broadcast revenue the industry expects to receive for each of the eight years beginning with the 2007 season under agreements that NASCAR has
reached with its various broadcast partners.

Industry live broadcast revenue in 2007 was approximately $505,000,000 for the NASCAR Sprint
Cup Series, NASCAR Nationwide Series and NASCAR Camping World Truck Series as compared with industry live broadcast revenue of approximately $576,000,000 in 2006. The average for the eight-year contract from 2007 through 2014 is $560,000,000, a 40%
increase over the average for the prior six-year contract of $400,000,000.

For the 2007 season, NASCAR allocated the live broadcast
revenue as follows: $473,437,500 or 93.75% to the NASCAR Sprint Cup Series; $29,037,500 or 5.75% to the NASCAR Nationwide Series; and $2,525,000 or 0.50% to the NASCAR Camping World Truck Series. The allocation for 2007 was not
significantly different than it was for the six years in the prior contract. NASCAR reserves the right in its sole discretion to make changes to this allocation in future years.

Management anticipated that the new contract would include an allocation of more of the broadcast revenue from the NASCAR Sprint Cup Series to the NASCAR
Nationwide Series. The cash flows of our three Midwest facilities are dependent upon sponsorships, admissions and live broadcast revenues, particularly from the NASCAR Nationwide Series. Because the allocation of live broadcast revenue for the
NASCAR Nationwide Series was less than anticipated, we concluded that it was necessary for us to review the long-lived assets of each of our three Midwest facilities for impairment. In accordance with FASB Statement No. 144, the recoverability
of assets to be held and used was measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. As a result of the recoverability test, we concluded that the
carrying amount of each of our Midwest facilities exceeded the undiscounted cash flows.

Since the carrying amount of the assets exceeded
the fair value, an impairment charge was recognized by the amount by which the carrying amount of the assets exceeded the fair value. Fair value of the assets was determined using a valuation methodology that consisted of the cost approach, which
gave specific consideration to the value of the land plus contributory value to the improvements, and the comparable sales approach. Based upon the cost approach utilized for the valuations, there is an assumption that these three facilities will
continue to operate as racetracks and it is our intention to continue operating them unless it is determined that future prospects no longer justify such action. The long-lived assets deemed to be impaired consisted of track facilities.

Based on the results of this analysis, we recorded non-cash impairment charges in 2006 to write-down the carrying value of long-lived assets at our
Midwest facilities to fair value, as follows:



|          |  |                                    |             |                                |   |                            |  |   |           
|--------- |  | ---------------------------------- | ----------- | ------------------------------ | - | -------------------------- |  | - | ----------
|          |  | Carrying Value ofLong-Lived Assets |             | Fair Value ofLong-Lived Assets |   | Non-CashImpairment Charges
|Nashville |  | $                                  | 73,670,000  |                                | $ | 57,500,000                 |  | $ | 16,170,000
|Memphis   |  |                                    | 20,582,000  |                                |   | 12,700,000                 |  |   | 7,882,000 
|Gateway   |  |                                    | 54,557,000  |                                |   | 17,200,000                 |  |   | 37,357,000
|          |  |                                    |             |                                |   |                            |  |   |           
|Total     |  | $                                  | 148,809,000 |                                | $ | 87,400,000                 |  | $ | 61,409,000
|          |  |                                    |             |                                |   |                            |  |   |           



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We accounted for goodwill in accordance with the provisions of FASB Statement No. 142, Goodwill
and Other Intangible Assets. Goodwill is not amortized but is subject to an annual (or under certain circumstances more frequent) impairment test based on its estimated fair value. Based on the factors noted above related to the long-lived
assets impairment, we completed an assessment of goodwill for potential impairment in the third quarter of 2006 and determined that there was an impairment loss related to the goodwill balance of $2,487,000 associated with our Midwest operations. As
a result of this analysis, we also recorded a non-cash impairment charge of $2,487,000 in the third quarter of 2006 to write-down to zero the carrying value of our goodwill.

Additionally, on October 27, 2006 we sold our corporate aircraft. Since the fair value of the aircraft was less than its carrying value of
$4,792,000, we recorded a non-cash impairment charge of $722,000 in the third quarter of 2006. Net proceeds from the sale were $4,098,000.

Competition

Our racing events compete with other racing events sanctioned by various racing bodies and with other sports and recreational events
scheduled on the same dates. Racing events sanctioned by different organizations are often held on the same dates at different tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location
and customer conveniences, among other things, differentiate the motorsports facilities.

Seasonality

We derive a substantial portion of our total revenues from admissions, television broadcast rights and other event-related revenue attributable to major
motorsports events held from March through October. As a result, our business is highly seasonal.

Employees

As of December 31, 2008, we had approximately 132 full-time employees and 12 part-time employees. We engage temporary personnel to assist during our
motorsports racing season, many of whom are volunteers. We believe that we enjoy a good relationship with our employees.

Available Information

We file annual, quarterly and current reports, information statements and other information with the United States Securities and Exchange
Commission (the SEC). The public may read and copy any materials we file with the SEC at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that
site is http://www.sec.gov.

Internet Address

We maintain a website where additional information concerning our business and various upcoming events can be found. The address of our Internet website is http://www.dovermotorsports.com. We provide a link on
our website, under Investor Relations, to our filings with the SEC, including our annual report on Form 10-K, proxy statement, Section 16 reports, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports.



|Item 1A. | Risk Factors
|-------- | ------------

Disclosure regarding the most
significant factors that may adversely affect our business, operations, industry or financial position or our future financial performance is set forth under the section entitled, Factors That May Affect Operating Results; Forward-Looking
Statements, beginning on page 18.



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|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

We have not
received any written comments that were issued more than 180 days before December 31, 2008, the end of the fiscal year covered by this report, from the SEC staff regarding our periodic or current reports under the Securities Exchange Act of
1934 that remain unresolved.



|Item 2. | Properties
|------- | ----------

Dover International Speedway

Dover International Speedway is located in Dover, Delaware, on approximately 770 acres of land we own. Use by Gaming of our 5/8-mile harness racing
track is under an easement from us which does not require the payment of any rent. Under the terms of the easement, Gaming has exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of
the following year, together with set up and tear down rights for the two weeks before and after such period. The harness track is located on our property and is on the inside of our one-mile motorsports superspeedway. Gamings indoor
grandstands are used by us at no charge in connection with our motorsports events. We also lease our principal executive office space from Gaming. Various easements and agreements relative to access, utilities and parking have also been entered into
between us and Gaming relative to our respective Dover, Delaware facilities.

Gateway International Raceway

Gateway International Raceway is located on approximately 306 acres of land in Madison, Illinois, five miles from the Gateway Arch in St. Louis. We own
approximately 150 acres and have long-term leases with purchase options (expiring in 2011, 2025 and 2070) for approximately 160 additional acres. We have granted a first mortgage lien on all the real property owned and a security interest in all
property we lease at Gateway to Southwestern Illinois Development Authority (SWIDA) as security for the repayment of principal and interest on our remaining $4.1 million of SWIDA bonds.

Memphis Motorsports Park

Memphis Motorsports Park is
located on approximately 350 acres of land we own approximately ten miles northeast of downtown Memphis, Tennessee. The facility is encumbered by a first trust deed to First Tennessee Bank for the purpose of securing a stand-by letter of credit
issued by First Tennessee Bank to Gateway International Motorsports Corporation to satisfy its debt service reserve fund obligation to SWIDA.

Nashville
Superspeedway

Nashville Superspeedway is located on approximately 1,400 acres of land we own in Wilson County and Rutherford County,
Tennessee.

Intellectual Property

We
have various registered and common law trademark rights, including, but not limited to, Dover, Dover Motorsports, Dover International Speedway, Nashville Speedway, Nashville
Superspeedway, Gateway International Raceway, Memphis Motorsports Park, Gateway Motorsports Club, Gateway Guy, Music City Motorsports Club, Monster Mile,
Velocity, Monster Bridge, The Most Exciting Seat in Sports!, Concrete Monster, Miles the Monster, Take a Kid to the Races. We also have limited rights to use the names and
logos of NASCAR, various sponsors, drivers and other businesses in connection with promoting our events and certain merchandising programs. Due to the value of our intellectual property rights for promotional purposes, it is
our intention to vigorously protect these rights, through litigation, if necessary.



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|Item 3. | Legal Proceedings
|------- | -----------------

We are a party to
ordinary routine litigation incidental to our business. Management does not believe that the resolution of any of these matters is likely to have a serious adverse effect on our results of operations, financial condition or cash flows.



|Item 4. | Submission Of Matters To A Vote Of Security Holders
|------- | ---------------------------------------------------

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders.

Executive
Officers Of The Registrant

See Part III, Item 10 of this Annual Report on Form 10-K for information about our executive
officers.

Part II



|Item 5. | Market For Registrants Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities
|------- | ------------------------------------------------------------------------------------------------------------

Our common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol DVD. Our Class A common stock is not
publicly traded but is freely convertible on a one-for-one basis into common stock at any time at the option of the holder thereof. As of February 27, 2009, there were 18,122,996 shares of common stock and 18,510,975 shares of Class A
common stock outstanding. There were 1,077 holders of record for common stock and 12 holders of record for Class A common stock.

We
may not be able to maintain our listing with the NYSE  refer to our discussion under the section entitled, Factors That May Affect Operating Results; Forward-Looking Statements, on page 22.

The high and low sales prices for our common stock on the NYSE and the dividends declared per share for the years ended December 31, 2008 and 2007
are detailed in the following table:



|                   |  |      |      |     |   |                   |  |   |      
|------------------ |  | ---- | ---- | --- | - | ----------------- |  | - | -----
|Quarter Ended:     |  | High |      | Low |   | DividendsDeclared
|December 31, 2008  |  | $    | 5.67 |     | $ | 0.98              |  | $ | 0.015
|September 30, 2008 |  | $    | 6.09 |     | $ | 3.96              |  | $ | 0.015
|June 30, 2008      |  | $    | 6.66 |     | $ | 4.71              |  | $ | 0.015
|March 31, 2008     |  | $    | 7.68 |     | $ | 5.54              |  | $ | 0.015
|                   |  |      |     
|December 31, 2007  |  | $    | 6.89 |     | $ | 6.22              |  | $ | 0.015
|September 30, 2007 |  | $    | 6.50 |     | $ | 5.27              |  | $ | 0.015
|June 30, 2007      |  | $    | 6.40 |     | $ | 5.22              |  | $ | 0.015
|March 31, 2007     |  | $    | 5.60 |     | $ | 5.10              |  | $ | 0.015

Our revolving credit agreement allows us to pay dividends in the ordinary course of business
consistent with past practices as long as we are not in default under the agreement.

On July 28, 2004, our Board of Directors
authorized the repurchase of up to 2,000,000 shares of our outstanding common stock. The purchases may be made in the open market or in privately negotiated transactions as conditions warrant. The repurchase authorization does not obligate us to
acquire any specific number of shares and may be suspended at any time. No repurchases were made in the fourth quarter of 2008 and we had remaining purchase authority of 1,634,607 shares.



9



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##### Table of Contents

Common Stock Performance

The graph below compares the cumulative total return of the following:



| |  |  | our Common Stock;
| | - |  | -----------------



| |  |  | the S&P Composite 500 Index; and
| | - |  | --------------------------------



| |  |  | an index of peer companies.
| | - |  | ---------------------------

The
peer index we selected consists of the following companies engaged in the motorsports business: Dover Motorsports, Inc., Speedway Motorsports, Inc. and International Speedway Corporation. The graph assumes that the value of the investment in our
common stock and each index was 100 at December 31, 2003 and all dividends were reinvested. The comparisons in this table are required by the Securities and Exchange Commission and, therefore, are not intended to forecast or be necessarily
indicative of any future return on our common stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

AMONG DOVER MOTORSPORTS, INC., THE S & P 500 INDEX AND A PEER GROUP

LOGO





|* | $100 invested on December 31, 2003 in stock or index-including reinvestment of dividends. Fiscal year ending December 31.
|- | -------------------------------------------------------------------------------------------------------------------------



10



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##### Table of Contents

|Item 6. | Selected Financial Data
|------- | -----------------------

The following table
summarizes certain selected historical financial data and should be read together with Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and the notes thereto
included elsewhere in this document.

Five Year Selected Financial Data



|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                                                 |  | Years Ended December 31, |        
|                                                                                 |  | 2008                     |         |   | 2007 |   |         | 2006 |  |   | 2005    |   |  | 2004 |        
|Consolidated Statement of Operations Data (in thousands, except per share data): |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Revenues                                                                         |  | $                        | 84,279  |   |      | $ | 86,052  |      |  | $ | 91,274  |   |  | $    | 90,999  |   |  | $ | 84,188  |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Expenses:                                                                        |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Operating and marketing                                                          |  |                          | 55,262  |   |      |   | 55,621  |      |  |   | 54,178  |   |  |      | 52,793  |   |  |   | 50,164  |  
|Impairment charges(a)                                                            |  |                          | 12,795  |   |      |   |        |      |  |   | 64,618  |   |  |      |        |   |  |   |        |  
|General and administrative                                                       |  |                          | 12,528  |   |      |   | 12,571  |      |  |   | 12,626  |   |  |      | 13,697  |   |  |   | 13,585  |  
|Depreciation and amortization                                                    |  |                          | 6,909   |   |      |   | 6,369   |      |  |   | 8,726   |   |  |      | 9,433   |   |  |   | 9,198   |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|                                                                                 |  |                          | 87,494  |   |      |   | 74,561  |      |  |   | 140,148 |   |  |      | 75,923  |   |  |   | 72,947  |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Operating (loss) earnings                                                        |  |                          | (3,215  | ) |      |   | 11,491  |      |  |   | (48,874 | ) |  |      | 15,076  |   |  |   | 11,241  |  
|Interest expense, net                                                            |  |                          | (3,995  | ) |      |   | (4,149  | )    |  |   | (3,963  | ) |  |      | (3,515  | ) |  |   | (3,427  | )
|Loss on extinguishment of debt(b)                                                |  |                          |        |   |      |   |        |      |  |   |        |   |  |      | (3,174  | ) |  |   |        |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|(Loss) earnings from continuing operations before income tax benefit (expense)   |  |                          | (7,210  | ) |      |   | 7,342   |      |  |   | (52,837 | ) |  |      | 8,387   |   |  |   | 7,814   |  
|Income tax benefit (expense)                                                     |  |                          | 1,531   |   |      |   | (3,598  | )    |  |   | 17,492  |   |  |      | (4,412  | ) |  |   | (4,047  | )
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|(Loss) earnings from continuing operations                                       |  | $                        | (5,679  | ) |      | $ | 3,744   |      |  | $ | (35,345 | ) |  | $    | 3,975   |   |  | $ | 3,767   |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|(Loss) earnings per common share from continuing operations:                     |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Basic                                                                            |  | $                        | (0.16   | ) |      | $ | 0.10    |      |  | $ | (0.98   | ) |  | $    | 0.10    |   |  | $ | 0.09    |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Diluted                                                                          |  | $                        | (0.16   | ) |      | $ | 0.10    |      |  | $ | (0.98   | ) |  | $    | 0.10    |   |  | $ | 0.09    |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Dividends declared                                                               |  | $                        | 0.06    |   |      | $ | 0.06    |      |  | $ | 0.06    |   |  | $    | 0.05    |   |  | $ | 0.04    |  
|                                                                                 |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|                                                                                 | 
|                                                                                 |  | December 31,             |        
|                                                                                 |  | 2008                     |         |   | 2007 |   |         | 2006 |  |   | 2005    |   |  | 2004 |        
|Consolidated Balance Sheet Data (in thousands):                                  |  |                          |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Working capital deficit                                                          |  | $                        | (7,251  | ) |      | $ | (9,255  | )    |  | $ | (11,032 | ) |  | $    | (11,973 | ) |  | $ | (12,533 | )
|Property and equipment, net(a)                                                   |  |                          | 144,684 |   |      |   | 157,748 |      |  |   | 152,502 |   |  |      | 221,005 |   |  |   | 220,949 |  
|Total assets                                                                     |  |                          | 155,179 |   |      |   | 167,706 |      |  |   | 162,934 |   |  |      | 233,426 |   |  |   | 248,250 |  
|Long-term debt, less current portion(b)                                          |  |                          | 45,171  |   |      |   | 46,398  |      |  |   | 43,211  |   |  |      | 54,003  |   |  |   | 44,684  |  
|Total stockholders equity(c)                                                    |  |                          | 67,447  |   |      |   | 76,116  |      |  |   | 74,260  |   |  |      | 113,277 |   |  |   | 138,466 |  



|(a) | We recorded an impairment charge of $12,795,000 in the fourth quarter of 2008 related to the impairment of long-lived
assets.
|--- | -----------------------------------------------------------------------------------------------------------------------------

We recorded impairment charges of $62,131,000 and $2,487,000 in the third quarter of 2006 related to the
impairment of long-lived assets and goodwill, respectively.

|(b) | On October 6, 2005, we redeemed $11,908,000 of outstanding SWIDA bonds for $14,587,000 (including a $2,676,000
premium to the bondholders), plus accrued interest. We wrote-off $495,000 of deferred bond costs as a result of the redemption.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | On August 10, 2005, we commenced a tender offer to purchase up to 1,706,543 shares of our common stock and up to
2,323,019 shares of our Class A common stock at a fixed price of $7.00 per share. The offer expired on September 8, 2005. We purchased 1,706,543 shares of our common stock and 2,311,960 shares of our Class A common stock for
$28,562,000, including expenses, in connection with the tender offer.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 7. | Managements Discussion And Analysis Of Financial Condition And Results Of Operation
|------- | ------------------------------------------------------------------------------------

The following discussion is based upon and should be read together with the consolidated financial statements and notes thereto included elsewhere in this
document.

We classify our revenues as admissions, event-related, broadcasting and other. Admissions includes ticket sales for
all our events. Event-related revenue includes amounts received from sponsorship fees; luxury suite rentals; hospitality tent rentals and catering; concessions and souvenir sales and vendor commissions for the right to sell concessions
and souvenirs at our facilities; sales of programs; track rentals and other event-related revenues. Broadcasting revenue includes rights fees obtained for television and radio broadcasts of events held at our speedways and ancillary
media rights fees. Other revenue includes other miscellaneous revenues.

Revenues pertaining to specific events are deferred
until the event is held. Concession revenue from concession stand sales and sales of souvenirs are recorded at the time of sale. Revenues and related expenses from barter transactions in which we receive advertising or other goods or services in
exchange for sponsorships of motorsports events are recorded at fair value in accordance with Emerging Issues Task Force (EITF) Issue No. 99-17, Accounting for Advertising Barter Transactions. Barter transactions accounted
for $1,163,000, $1,240,000 and $1,207,000 of total revenues for the years ended December 31, 2008, 2007 and 2006, respectively.

Expenses that are not directly related to a specific event are recorded as incurred. Expenses that specifically relate to an event are deferred until the event is held, at which time they are expensed. Our expenses include prize and point
fund monies and sanction fees paid to various sanctioning bodies, including NASCAR, labor, advertising, cost of goods sold for merchandise and souvenirs, and other expenses associated with the promotion of our racing events.

Results of Operations

Year Ended December 31, 2008 vs. Year
Ended December 31, 2007

Admissions revenue was $31,034,000 in 2008 as compared to $33,923,000 in 2007. We promoted fifteen major
events during 2008 and 2007. The majority of the $2,889,000 decrease resulted from lower admissions revenue at our June and September NASCAR event weekends at Dover International Speedway. We believe the decrease in attendance was attributable in
part to the general downturn in economic conditions, including higher gas prices since most of our customers are from out of state, and inclement weather for the June event weekend.

Event-related revenue was $25,652,000 in 2008 as compared to $24,786,000 in 2007. The $866,000 increase was primarily due to higher sponsorship revenues
at the majority of our major events we promoted during 2008 and higher concession sales at our June NASCAR Sprint Cup Series event at Dover International Speedway.

Broadcasting revenue was $27,532,000 in 2008 as compared to $27,272,000 in 2007. The $260,000 increase resulted primarily from higher broadcasting revenue for our NASCAR-sanctioned events promoted during 2008.
Partially offsetting this increase was a $309,000 decrease in ancillary media rights fees in 2008.

Operating and marketing expenses were
$55,262,000 in 2008 as compared to $55,621,000 in 2007. The $359,000 decrease primarily related to lower sanction fees, advertising and promotional expenses and hospitality expenses at the major events promoted at our Mid-West facilities. These
decreases were partially offset by higher operating and marketing expenses at our June and September NASCAR event weekends at Dover International Speedway.

During the fourth quarter of 2008, we recorded impairment charges of $12,795,000 as a result of our review of the long-lived assets of each of our Midwest facilities for impairment. Based on the results of this
analysis, we recorded non-cash impairment charges of $2,150,000, $3,140,000 and $7,505,000 to write-down the carrying value of long-lived assets at our Memphis, Nashville and Gateway facilities, respectively, to fair value.



12



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##### Table of Contents

General and administrative expenses remained consistent between 2008 and 2007 at $12,528,000 and
$12,571,000, respectively.

Depreciation and amortization expense was $6,909,000 in 2008 as compared to $6,369,000 in 2007. The increase
was due primarily to assets placed in service during the second quarter of 2007 and 2008 related to our Monster Makeover project in Dover, Delaware.

Net interest expense remained consistent between 2008 and 2007 at $3,995,000 and $4,149,000, respectively.

Loss before income taxes was $7,210,000 in 2008 as compared to earnings of $7,342,000 in 2007. Excluding the non-cash impairment charges, our adjusted earnings before income tax expense were $5,585,000 in 2008.



|                                            |  |   |            |  
|------------------------------------------- |  | - | ---------- | -
|Loss before income tax benefit              |  | $ | (7,210,000 | )
|Non-cash impairment charges                 |  |   | 12,795,000 |  
|                                            |  |   |            |  
|Adjusted earnings before income tax expense |  | $ | 5,585,000  |  
|                                            |  |   |            |  

Our adjusted earnings before income tax expense for 2008 were lower than our earnings before
income tax expense in the prior year primarily as a result of the lower admissions and higher depreciation expense discussed above. These reductions to earnings were partially offset by higher event-related and broadcasting revenues and lower
operating and marketing and interest expenses.

Our effective income tax rates for 2008 and 2007 were 21.2% and 49.0%, respectively. The
decrease in the effective income tax rate from the prior year rate was primarily the result of recording a valuation allowance against the state tax benefits associated with the non-cash impairment charges recorded during the fourth quarter of 2008.

Year Ended December 31, 2007 vs. Year Ended December 31, 2006

Admissions revenue was $33,923,000 in 2007 as compared to $35,070,000 in 2006. We promoted fifteen major events during 2007 and 2006. The majority of the
$1,147,000 decrease resulted from lower admissions revenue at most of the major events we promoted in 2007 as compared to 2006. The decrease in attendance was attributable in part to inclement weather.

Event-related revenue was $24,786,000 in 2007 as compared to $25,585,000 in 2006. The $799,000 decrease was primarily due to lower sponsorship revenues
at our June NASCAR event weekend at Dover International Speedway and reduced revenues overall at the June event as a result of it being postponed one day due to rain. Additionally, event-related revenues at our Nashville and Gateway facilities were
lower in 2007 as compared to 2006. These decreases were partially offset by an increase in event-related revenue of $941,000 at our September NASCAR event weekend at the Dover facility.

Broadcasting revenue was $27,272,000 in 2007 as compared to $30,436,000 in 2006. The $3,164,000 decrease resulted primarily from lower television
broadcasting rights related to our NASCAR sanctioned events promoted during 2007. Effective for the 2007 race season, NASCAR entered into a new eight-year agreement with its broadcast partners in which the annual average broadcast rights fees under
that agreement will be approximately 40% higher than the annual average of the prior six-year agreement. In the first year of the new contract, revenues were lower than the final year of the prior contract. Pursuant to the terms of our sanction
agreements, NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR Sprint Cup Series or NASCAR Nationwide Series event as a component of its sanction fees and remits the remaining 90% to us as the event promoter, which we
record as revenue.

Operating and marketing expenses were $55,621,000 in 2007 as compared to $54,178,000 in 2006. The $1,443,000 increase
primarily related to higher operating and marketing expenses at our major motorsports events, most notably a $544,000 increase in advertising and promotions expenses and an increase in wages and benefits for grounds maintenance.



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##### Table of Contents

During the third quarter of 2006, we recorded impairment charges of $64,618,000 principally as a result
of our review of the long-lived assets of each of our three Midwest facilities for impairment. Based on the results of this analysis, we recorded non-cash impairment charges of $16,170,000, $7,882,000 and $37,357,000 to write-down the carrying value
of long-lived assets at our Nashville, Memphis and Gateway facilities, respectively, to fair value. Based on the factors related to the long-lived assets impairment, we completed an assessment of goodwill for potential impairment and determined that
there was an impairment loss related to the goodwill balance of $2,487,000 that was associated with the Midwest operations. As a result of this analysis, we recorded a non-cash impairment charge of $2,487,000 to write-down to zero the carrying value
of our goodwill. Additionally, in connection with the sale of our corporate aircraft, we recorded a non-cash impairment charge of $722,000 as of September 30, 2006, to write-down the carrying amount of the aircraft to fair value.

General and administrative expenses remained consistent between 2007 and 2006 at $12,571,000 and $12,626,000, respectively.

Depreciation and amortization expense was $6,369,000 in 2007 as compared to $8,726,000 in 2006. The decrease resulted primarily from a reduction in our
depreciable asset base resulting from an impairment charge recorded in the third quarter of 2006.

Net interest expense was $4,149,000 in
2007 as compared to $3,963,000 in 2006. The increase resulted primarily from the recording of a $645,000 interest accrual for taxes in accordance with Financial Accounting Standards Board Interpretation No. 48, partially offset by a decrease in
our average outstanding borrowings.

Earnings before income taxes were $7,342,000 in 2007 as compared to a loss of $52,837,000 in 2006.
Excluding the non-cash impairment charges, our adjusted earnings before income tax expense were $11,781,000 in 2006.



|                                                                       |  |   |             |  
|---------------------------------------------------------------------- |  | - | ----------- | -
|Loss from continuing operations before income tax benefit              |  | $ | (52,837,000 | )
|Non-cash impairment charges                                            |  |   | 64,618,000  |  
|                                                                       |  |   |             |  
|Adjusted earnings from continuing operations before income tax expense |  | $ | 11,781,000  |  
|                                                                       |  |   |             |  

Our earnings before income tax expense for 2007 were lower than our adjusted earnings before
income tax expense from the same period in the prior year as a result of lower admissions, event-related revenue and broadcasting revenues and higher operating expenses as discussed above. These reductions to earnings were partially offset by lower
depreciation and amortization expenses.

Our effective income tax rates for 2007 and 2006 were 49.0% and 33.1%, respectively. The increase
in the effective income tax rate from the prior year rate was primarily the result of recording a valuation allowance against state tax benefits associated with non-cash impairment charges recorded during 2006.

Liquidity and Capital Resources

Our operations are
seasonal in nature with a majority of our motorsports events occurring during the second and third quarters. However, our cash flows from operating activities are more evenly spread throughout the year, primarily due to the impact of advance ticket
sales and other event-related cash receipts, such as sponsorship and luxury suite rentals. The non-cash impairment charges we recorded in the fourth quarter of 2008 had no impact on our liquidity for the year ended December 31, 2008. As
discussed in NOTE 3  Impairment Charges of the consolidated financial statements included elsewhere in this document, fair value of the assets for the Nashville and Gateway facilities was determined using a valuation methodology that consisted
of the cost approach, which gave specific consideration to the value of the land plus contributory value to the improvements, and the comparable sales approach. Based upon the cost approach utilized for the valuations, there is an assumption that
these two facilities will continue to operate as racetracks and it is our intention to continue operating them unless it is determined that future prospects no longer justify such action. Fair value of the assets for Memphis was determined using a
valuation methodology that considered the terms of the stock purchase agreement with Gulf Coast (see NOTE 1  Business Operations of the consolidated financial statements included elsewhere in this document) and the comparable sales approach.



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##### Table of Contents

Net cash provided by operating activities of continuing operations was $10,048,000 in 2008 as compared to
$11,569,000 in 2007. The decrease in 2008 was primarily due to the decrease in net earnings excluding non-cash impairment charges.

Net
cash used in investing activities of continuing operations was $7,677,000 in 2008 as compared to $11,764,000 in 2007. Capital expenditures were $6,577,000 in 2008, down from $11,279,000 in 2007. The 2008 additions related primarily to the Monster
Makeover project, including the construction of a new entranceway, fan zone and medical center placed in service in the second quarter of 2008, and the renovation and construction of other fan amenities at our Dover facility. The 2007 additions also
related primarily to our Monster Makeover project, including the construction of new luxury skybox suites which were completed in the second quarter of 2007, site paving, construction of a new entranceway, fan zone and medical center placed in
service in 2008, and the renovation of other fan amenities at our Dover facility.

Net cash used in financing activities was $2,410,000 in
2008 as compared to net cash provided by financing activities of $224,000 in 2007. We had net repayments on our outstanding line of credit of $100,000 in 2008 as compared to net borrowings of $3,300,000 in 2007. We paid $2,184,000 in cash dividends
in 2008 as compared to $2,176,000 in 2007. During 2008 and 2007, we purchased and retired 20,877 and 10,151 shares of our common stock at an average purchase price of $6.56 and $5.35 per share, respectively, not including nominal brokerage
commissions.

On January 28, 2009, our Board of Directors declared a quarterly cash dividend on both classes of common stock of $0.01
per share. The dividend is payable on March 10, 2009 to shareholders of record at the close of business on February 10, 2009.

At
December 31, 2008, Dover Motorsports, Inc. and all of its wholly owned subsidiaries, as co-borrowers, were parties to a $73,000,000 unsecured revolving credit agreement with a bank group. The credit facility expires July 1, 2011. It
provides for seasonal funding needs, capital improvements, letter of credit requirements and other general corporate purposes. Interest is based, at our option, upon LIBOR plus a margin that varies between 125 and 200 basis points (200 basis points
at December 31, 2008) depending on the ratio of funded debt to earnings before interest, taxes, depreciation and amortization (the leverage ratio) or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%)
plus a margin that varies between -50 and +25 basis points (+25 basis points at December 31, 2008) depending on the leverage ratio, except that the base rate option is not available for the portion of indebtedness equal to the notional amount
under the interest rate swap agreement described below. The terms of the credit facility contain certain covenants including minimum tangible net worth, fixed charge coverage and maximum funded debt to earnings before interest, taxes, depreciation
and amortization (EBITDA). In addition, the credit agreement includes a material adverse change clause. The credit facility also provides that if we default under any other loan agreement, that would be a default under this credit
facility. At December 31, 2008, we were in compliance with the terms of the credit facility including all covenants.

Material adverse
changes in our results of operations could impact our ability to maintain financial ratios necessary to satisfy these requirements. There was $42,200,000 outstanding under the credit facility at December 31, 2008, at a weighted average interest
rate of 4.09%. After consideration of stand-by letters of credit outstanding, borrowings of $8,126,000 were available pursuant to the credit facility at December 31, 2008. Based on projected future results, we expect to be in compliance with
all of the covenants for all measurement periods during the next twelve months.

Effective October 21, 2005, we entered into an
interest rate swap agreement that effectively converted $37,500,000 of our variable-rate debt to a fixed-rate basis, thereby hedging against the impact of potential interest rate changes. The notional amount of the swap agreement decreased to
$30,000,000 on November 1, 2006, to $20,000,000 on November 1, 2007, and to $10,000,000 on November 1, 2008. The agreement terminates on November 1, 2009. Under this agreement, we pay a fixed interest rate of 4.74%. In return,
the issuing lender refunds to us the variable-rate interest paid to the bank group under our revolving credit agreement on the same notional principal amount, excluding the margin that varies between 125 and 200 basis points depending on the
leverage ratio.



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##### Table of Contents

Our wholly-owned subsidiary, Midwest Racing, Inc., entered into a stock purchase agreement dated
January 28, 2009, to sell Memphis Motorsports Park to Gulf Coast Entertainment, L.L.C. Under the terms of the agreement, Midwest Racing will sell all of the stock of its wholly-owned subsidiary, Memphis International Motorsports Corporation,
the owner of Memphis Motorsports Park, to Gulf Coast for $10,000,000 in cash. Gulf Coast is the owner of Alabama Motorsports Park, a proposed multi-use entertainment complex expected to be constructed in Mobile, Alabama. As additional consideration
for the purchase, we will receive a two percent non-dilutable interest in Gulf Coast and expect to enter into an agreement to provide motorsports management services to Alabama Motorsports Park when the facilities become operational. Closing is
expected to take place on or before April 30, 2009 and is subject to financing and customary closing conditions. In March 2009, we received a $100,000 non-refundable deposit towards the purchase price.

We promoted 1 NASCAR Nationwide Series event, 1 NASCAR Camping World Truck Series event and 1 NHRA event in 2008 at our Memphis location. Although we
will no longer own this facility after the close of the sale, we expect to enter into an agreement with Gulf Coast to provide management services for the Memphis facility.

Cash provided by operating activities is expected to substantially fund our capital expenditures and maintenance of a dividend in 2009. Based on current
business conditions, we expect to spend approximately $2,500,000 on capital expenditures during 2009. These expenditures primarily relate to our Monster Makeover project. On May 24, 2006, we announced plans for a five-year capital improvement
project, referred to as the Monster Makeover, that will provide new offerings and upgraded amenities for fans, competitors and the media. The project is expected to take up to five years to complete at an estimated total cost of
approximately $25,000,000 to $30,000,000, of which approximately $19,300,000 was spent as of December 31, 2008. We continue to review the amount and timing of capital expenditures in light of our current earnings level. Additionally, we expect
to contribute between $300,000 and $650,000 to our pension plans in 2009 in order to satisfy minimum statutory funding requirements. We expect continued cash flows from operating activities and funds available from our credit agreement to provide
for our working capital needs and capital spending requirements at least through the next twelve months, as well as any cash dividends our Board of Directors may declare, and also provide for our long-term liquidity.

Contractual Obligations

At December 31, 2008,
we had the following contractual obligations and other commercial commitments:



|                                                           |  |       |            |                        |   |             |  |            |            |            |   |         |  |   |          
|---------------------------------------------------------- |  | ----- | ---------- | ---------------------- | - | ----------- |  | ---------- | ---------- | ---------- | - | ------- |  | - | ---------
|                                                           |  |       |            | Payments Due by Period
|                                                           |  | Total |            | 2009                   |   | 2010  2011 |  | 2012 2013 |            | Thereafter
|Revolving line of credit                                   |  | $     | 42,200,000 |                        | $ |            |  | $          | 42,200,000 |            | $ |        |  | $ |         
|SWIDA bonds(b)                                             |  |       | 4,101,000  |                        |   | 1,130,000   |  |            | 2,580,000  |            |   | 391,000 |  |   |         
|                                                           |  |       |            |                        |   |             |  |            |            |            |   |         |  |   |          
|Total debt                                                 |  |       | 46,301,000 |                        |   | 1,130,000   |  |            | 44,780,000 |            |   | 391,000 |  |   |         
|Estimated interest payments on revolving line of credit(a) |  |       | 3,739,000  |                        |   | 1,669,000   |  |            | 2,070,000  |            |   |        |  |   |         
|Interest payments on SWIDA bonds(b)                        |  |       | 662,000    |                        |   | 327,000     |  |            | 317,000    |            |   | 18,000  |  |   |         
|Operating leases                                           |  |       | 4,737,000  |                        |   | 312,000     |  |            | 406,000    |            |   | 332,000 |  |   | 3,687,000
|Pension contributions(c)                                   |  |       | 475,000    |                        |   | 475,000     |  |            |           |            |   |        |  |   |         
|                                                           |  |       |            |                        |   |             |  |            |            |            |   |         |  |   |          
|Total contractual cash obligations                         |  | $     | 55,914,000 |                        | $ | 3,913,000   |  | $          | 47,573,000 |            | $ | 741,000 |  | $ | 3,687,000
|                                                           |  |       |            |                        |   |             |  |            |            |            |   |         |  |   |          



|(a) | The future interest payments on our revolving credit agreement
were estimated using the current outstanding principal as of December 31, 2008 and related interest rates.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | In 1996, Midwest Racing entered into an agreement with SWIDA to
receive the proceeds from the Taxable Sports Facility Revenue Bonds, Series 1996 (Gateway International Motorsports Corporation Project), a Municipal Bond Offering, in the aggregate principal amount of $21,500,000, of which $4,101,000
was outstanding at December 31, 2008. SWIDA loaned all of the proceeds from the Municipal Bond Offering to Midwest Racing for the purpose of the redevelopment, construction and expansion of Gateway. The proceeds of the SWIDA bonds were
irrevocably committed to complete construction of Gateway, to fund interest, to create a debt service reserve fund and to pay for the cost of issuance of the bonds. The repayment terms and debt service reserve requirements of the bonds issued in the
Municipal Bond Offering correspond to the terms of the SWIDA bonds. The bonds are being amortized through February 2012.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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We have established certain restricted cash funds to meet debt service as required by the SWIDA bonds,
which are held by the trustee (BNY Trust Company of Missouri). At December 31, 2008, $5,219,000 of cash and cash equivalents were restricted by the SWIDA bonds and are appropriately classified as a non-current asset in our consolidated balance
sheet. The SWIDA bonds are secured by a first mortgage lien on all the real property owned and a security interest in all property leased by Gateway. Also, the SWIDA bonds are unconditionally guaranteed by Midwest Racing. The SWIDA bonds bear
interest at a rate of 9.2%. Interest expense related to the SWIDA bonds was $382,000, $394,000 and $456,000 for the years ended December 31, 2008, 2007 and 2006, respectively. We have a stand-by letter of credit for $1,467,000, which is secured
by a trust deed on our facilities in Memphis, Tennessee, available to satisfy debt service reserve fund obligations. In addition, a portion of the property taxes to be paid by Gateway (if any) to the City of Madison Tax Incremental Fund have been
pledged to the annual retirement of debt and payment of interest.



|(c) | We expect to contribute between $300,000 and $650,000 to our
pension plans for 2009 in order to satisfy minimum statutory funding requirements. For years subsequent to 2009, we are unable to estimate what our pension contributions will be.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in Variable Rate Tax Exempt Infrastructure Revenue Bonds,
Series 1999, to acquire, construct and develop certain public infrastructure improvements which benefit the operation of Nashville Superspeedway, of which $22,300,000 was outstanding at December 31, 2008. Annual principal payments range from
$600,000 in September 2009 to $1,600,000 in 2029 and are payable solely from sales taxes and incremental property taxes generated from the facility. These bonds are direct obligations of the Sports Authority and are therefore not recorded on our
consolidated balance sheet. If the sales taxes and incremental property taxes are insufficient for the payment of principal and interest on the bonds, we would become responsible for the difference. We are exposed to fluctuations in interest rates
for these bonds. A significant increase in interest rates could result in us being responsible for debt service payments not covered by the sales and incremental property taxes generated from the facility. In the event we were unable to make the
payments, they would be made pursuant to a $22,674,000 irrevocable direct-pay letter of credit issued by our bank group.

We believe that
the sales taxes and incremental property taxes generated from the facility will continue to satisfy the necessary debt service requirements of the bonds through the maturity date in 2029. As of December 31, 2008 and 2007, $549,000 and $535,000,
respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay the remaining principal and interest due under the bonds. During 2008, we paid $1,165,000 into the sales and incremental property
tax fund and $1,151,000 was deducted from the fund for principal and interest payments. If the debt service is not satisfied from the sales and incremental property taxes generated from the facility, a portion of the bonds would become our
liability. If we fail to maintain the letter of credit that secures the bonds or we allow an uncured event of default to exist under our reimbursement agreement relative to the letter of credit, the bonds would be immediately redeemable.

We have not included our non current income taxes payable of $9,630,000 which is classified in accordance with FASB Interpretation No. 48 in the
contractual obligations disclosure since we cannot reasonably estimate the period of potential cash settlement for unrecognized tax benefits.

Related
Party Transactions

See NOTE 11  Related Party Transactions of the consolidated financial statements included elsewhere in this
document.

Critical Accounting Policies

The accounting policies described below are those we consider critical in preparing our consolidated financial statements. These policies include significant estimates made by management using information available at the time the estimates
are made. As described below, these estimates could change materially if different information or assumptions were used.



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Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely
than not to be realized. As of December 31, 2008, our valuation allowance net of federal income taxes was $8,357,000, which increased by $992,000 in 2008, on deferred tax assets related to state net operating loss carry-forwards. We have
considered ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event we were to determine that we would be able to realize all or a portion of these deferred tax assets, an adjustment to the
valuation allowance would increase earnings in the period such determination was made. Likewise, should we determine that we would not be able to realize all or a portion of our remaining deferred tax assets in the future, an adjustment to the
valuation allowance would be charged to earnings in the period such determination was made.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided for financial reporting purposes using the straight-line method over estimated
useful lives ranging from 5 to 10 years for furniture, fixtures and equipment and up to 40 years for facilities. These estimates require assumptions that are believed to be reasonable. We perform reviews for impairment of long-lived assets whenever
events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. Generally, fair value is
determined using valuation techniques such as the comparable sales approach and for facilities the cost approach, which gives specific consideration to the value of the land plus contributory value to the improvements. See NOTE 3  Impairment
Charges of the consolidated financial statements included elsewhere in this document for further discussion.

Accrued Pension Cost

The benefits provided by our defined-benefit pension plans are based on years of service and employees remuneration over their employment with us.
Accrued pension costs are developed using actuarial principles and assumptions which consider a number of factors, including estimates for the discount rate, assumed rate of compensation increase, and expected long-term rate of return on assets.
Changes in these estimates would impact the amounts that we record in our consolidated financial statements.

Recent Accounting Pronouncements

See NOTE 2  Summary of Significant Accounting Policies of the consolidated financial statements included elsewhere in this
document for a description of recent accounting pronouncements including the respective expected dates of adoption and effects on results of operations, financial condition and cash flows.

Factors That May Affect Operating Results; Forward-Looking Statements

In addition to historical information, this Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to our
financial condition, profitability, liquidity, resources, business outlook, proposed acquisitions, market forces, corporate strategies, consumer preferences, contractual commitments, legal matters, capital requirements and other matters. Documents
incorporated by reference into this Annual Report may also contain forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. To comply



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with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ substantially from the
anticipated results or other expectations expressed in our forward-looking statements. When words and expressions such as: believes, expects, anticipates, estimates, plans,
intends, objectives, goals, aims, projects, forecasts, possible, seeks, may, could, should, might,
likely, enable or similar words or expressions are used in this document, as well as statements containing phrases such as in our view, there can be no assurance, although no assurance can be
given or there is no way to anticipate with certainty, forward-looking statements are being made.

Various risks and
uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to differ materially from those set forth in our forward-looking statements, including the following factors:



| |  |  | stability and viability of sanctioning bodies;
| | - |  | ----------------------------------------------



| |  |  | success of or changes in our growth strategies;
| | - |  | -----------------------------------------------



| |  |  | development and potential acquisition of new facilities;
| | - |  | --------------------------------------------------------



| |  |  | trends and uncertainties in the motorsports industry;
| | - |  | -----------------------------------------------------



| |  |  | patron demographics;
| | - |  | --------------------



| |  |  | obtaining favorable contracts relative to sponsorships, event sanctions and broadcast rights;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | relationships with sanctioning bodies, sponsors, broadcast media, drivers and teams;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | general market and economic conditions, including consumer and corporate spending sentiment;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | ability to finance future business requirements;
| | - |  | ------------------------------------------------



| |  |  | ability to maintain compliance with debt covenants;
| | - |  | ---------------------------------------------------



| |  |  | the effect of changing interest rates;
| | - |  | --------------------------------------



| |  |  | the availability of adequate levels of insurance;
| | - |  | -------------------------------------------------



| |  |  | ability to successfully integrate acquired companies and businesses;
| | - |  | --------------------------------------------------------------------



| |  |  | management retention and development;
| | - |  | -------------------------------------



| |  |  | changes in Federal, state and local laws and regulations, including environmental regulations;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | the effect of weather conditions on outdoor event attendance;
| | - |  | -------------------------------------------------------------



| |  |  | military or other government actions;
| | - |  | -------------------------------------



| |  |  | availability of air travel; and
| | - |  | -------------------------------



| |  |  | national or local catastrophic events.
| | - |  | --------------------------------------

The above risks and uncertainties and the cautionary statements below should be considered in connection with any future forward-looking statements we make. We undertake no obligation to publicly update or revise any forward-looking
statements as a result of future developments, events or conditions. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or
the extent to which any factor, or combination of factors, may cause actual results to differ



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significantly from those forecast in any forward-looking statements. Given these risks and uncertainties, stockholders should not overly rely or attach undue
weight to our forward-looking statements as an indication of our actual future results.

Our Relationships With and the Success of Various Sanctioning
Bodies Is Vital To Our Success In Motorsports

Our continued success in motorsports is dependent upon the success of various governing
bodies of motorsports that sanction national racing events and our ability to secure favorable contracts with and maintain a good working relationship with these sanctioning bodies, particularly NASCAR. Sanctioning bodies regularly issue and award
sanctioned events and their issuance depends, in large part, on maintaining good working relationships with the sanctioning bodies. Many events are sanctioned on an annual basis with no contractual obligation to renew, including our agreements with
NASCAR. By awarding a sanctioned event or a series of sanctioned events, the sanctioning bodies do not warrant, nor are they responsible for, the financial success of any sanctioned event. Our success is directly tied to our ability to negotiate
favorable terms to our sanction agreements, including the amount of the sanction fee and purse, and our ability to continue to derive economic benefits from such agreements, such as our share of live broadcast revenues.

Our ability to obtain additional sanctioned events in the future and to negotiate favorable terms to our sanction agreements and the success of a
particular sanctioning body in attracting drivers and teams, signing series sponsors and negotiating favorable television and/or radio broadcast rights is dependent on many factors which are largely outside of our control. As our success depends on
the terms of our sanction agreements and the success of each event or series that we are promoting, a material change in the terms of a sanction agreement or a material adverse effect on a sanctioning body, such as the loss or defection of top
drivers, the loss of significant series sponsors, or the failure to obtain favorable broadcast coverage or to properly advertise the event or series could result in a reduction in our revenues from live broadcast coverage, admissions, luxury suite
rentals, sponsorships, hospitality, concessions and merchandise, which could have a material adverse effect on our business, financial condition and results of operations.

We Rely On Sponsorship Contracts To Generate Revenues

We receive a portion of our annual revenues
from sponsorship agreements, including the sponsorship of our various events and our permanent venues, such as title, official product and promotional partner sponsorships, billboards, signage and skyboxes. Loss
of our existing title sponsors or other major sponsorship agreements or failure to secure such sponsorship agreements in the future could have a material adverse effect on our business, financial condition and results of operations.

We are in negotiations with various potential sponsors for our 2009 events, including title sponsors for our two NASCAR Sprint Cup Series events and one
of our NASCAR Nationwide Series events at Dover International Speedway, one of our NASCAR Nationwide Series events at Nashville Superspeedway, and our NASCAR Nationwide Series and NASCAR Camping World Truck Series events at Memphis Motorsports Park.

Our Motorsports Events Face Intense Competition For Attendance, Television Viewership And Sponsorship

We compete with other auto speedways for the patronage of motor racing spectators as well as for sponsorships. Moreover, racing events sanctioned by
different organizations are often held on the same dates at different tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location and customer conveniences, among other things,
distinguish the motorsports facilities. In addition, all of our events compete with other sports and recreational events scheduled on the same dates. As a result, our revenues and operations are affected not only by our ability to compete in the
motorsports promotion market, but also by the availability of alternative spectator sports events, forms of entertainment and changing consumer preferences.



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General Market And Economic Conditions, Including Consumer And Corporate Spending, Could Negatively Affect Our
Financial Results

Our financial results depend significantly upon a number of factors relating to discretionary consumer and corporate
spending, including economic conditions affecting disposable consumer income and corporate budgets such as employment, business conditions, interest rates and taxation rates.

These factors can impact both attendance at our events and advertising and marketing dollars available from the motorsports industrys principal
sponsors and potential sponsors. Economic and other lifestyle conditions such as illiquid consumer and business credit markets adversely affect consumer and corporate spending thereby impacting our growth, revenue and profitability. Unavailability
of credit on favorable terms can adversely impact our operations, growth, development and capital spending plans. General economic conditions were significantly and negatively impacted by the September 11, 2001 terrorist attacks and the war in
Iraq and could be similarly affected by any future attacks, by a terrorist attack at any mass gathering or fear of such attacks, or by other acts or prospects of war. Any future attacks or wars or related threats could also increase our expenses
related to insurance, security or other related matters. A weakened economic and business climate, as well as consumer uncertainty and the loss of consumer confidence created by such a climate, could adversely affect our financial results.

The Sales Tax And Property Tax Revenues To Service The Revenue Bonds For Infrastructure Improvements At Nashville May Be Inadequate

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in revenue bonds to build local infrastructure improvements
which benefit the operation of Nashville Superspeedway, of which $22,300,000 was outstanding on December 31, 2008. Debt service on the bonds is payable solely from sales taxes and incremental property taxes generated from the facility. As of
December 31, 2008 and 2007, $549,000 and $535,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay the remaining principal and interest due under the bonds. During 2008, we
paid $1,165,000 into the sales and incremental property tax fund and $1,151,000 was deducted from the fund for principal and interest payments. These bonds are direct obligations of the Sports Authority and are therefore not recorded on our
consolidated balance sheet. In the event the sales taxes and incremental property taxes are insufficient to cover the payment of principal and interest on the bonds, we would become responsible for the difference. We are exposed to fluctuations in
interest rates for these bonds. A significant increase in interest rates could result in us being responsible for debt service payments not covered by the sales and incremental property taxes generated from the facility. In the event we were unable
to make the payments, they would be made under a $22,674,000 irrevocable direct-pay letter of credit issued by our bank group. We would be responsible to reimburse the banks for any drawings made under the letter of credit. Such an event could have
a material adverse effect on our business, financial condition and results of operations and compliance with debt covenants.

The Seasonality Of Our
Motorsports Events Increases The Variability Of Quarterly Earnings

Our business has been, and is expected to remain, seasonal given
that it depends on our outdoor events for a substantial portion of revenues. We derive a substantial portion of our motorsports revenues from admissions, event-related and broadcasting revenue attributable to six NASCAR-sanctioned events at Dover,
Delaware which are currently held in May and September. Total revenues from these events were approximately 70% of total revenues for each of the years in the three year period ended December 31, 2008. This has been offset to some degree by our
other motorsports events, but quarterly earnings will vary.

Our Insurance May Not Be Adequate To Cover Catastrophic Incidents

We maintain insurance policies that provide coverage within limits that are sufficient, in the opinion of management, to protect us from material
financial loss incurred in the ordinary course of business. We also purchase special event insurance for motorsports events to protect against race-related liability. However, there can be no assurance that this insurance will be adequate at all
times and in all circumstances. If we are held liable for damages beyond the scope of our insurance coverage, including punitive damages, our business, financial condition and results of operations could be materially and adversely affected.



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Bad Weather Can Have An Adverse Financial Impact On Our Motorsports Events

We sponsor and promote outdoor motorsports events. Weather conditions affect sales of tickets, concessions and souvenirs, among other things at these
events. Although we sell many tickets well in advance of the outdoor events and these tickets are issued on a non-refundable basis, poor weather conditions may adversely affect additional ticket sales and concessions and souvenir sales, which could
have an adverse effect on our business, financial condition and results of operations.

We do not currently maintain weather-related
insurance for major events. Due to the importance of clear visibility and safe driving conditions to motorsports racing events, outdoor racing events may be significantly affected by weather patterns and seasonal weather changes. Any unanticipated
weather changes could impact our ability to stage events. This could have a material adverse effect on our business, financial condition and results of operations.

Postponement And/Or Cancellation Of Major Motorsports Events Could Adversely Affect Us

If one of our events is postponed
because of weather or other reasons such as, for example, the general postponement of all major sporting events in this country following the September 11, 2001 terrorism attacks, we could incur increased expenses associated with conducting the
rescheduled event, as well as possible decreased revenues from tickets, food, drinks and merchandise at the rescheduled event. If such an event is cancelled, we could incur the expenses associated with preparing to conduct the event as well as lose
the revenues, including live broadcast revenues associated with the event.

If a cancelled event is part of the NASCAR Sprint Cup Series or
NASCAR Nationwide Series, we could experience a reduction in the amount of money received from television revenues for all of our NASCAR-sanctioned events in the series that experienced the cancellation. This would occur if, as a result of the
cancellation, and without regard to whether the cancelled event was scheduled for one of our facilities, NASCAR experienced a reduction in broadcast revenues greater than the amount scheduled to be paid to the promoter of the cancelled event.

Due To Our Concentrated Stock Ownership, Stockholders May Have No Effective Voice In Our Management

We have elected to be treated as a controlled corporation as defined by New York Stock Exchange Rule 303A. We are a controlled
corporation because a single person, Henry B. Tippie, the Chairman of our Board of Directors, controls in excess of fifty percent of our voting power. This means that he has the ability to determine the outcome of the election of directors at our
annual meetings and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power. Such a concentration of voting power could also have the effect of delaying or
preventing a third party from acquiring us at a premium. In addition, as a controlled corporation, we are not required to comply with certain New York Stock Exchange rules.

We May Not Be Able To Maintain Our Listing With The New York Stock Exchange

Our common stock is
traded on the NYSE. We are required to maintain market capitalization of more than $75,000,000 (measured over a 30 day trading period) or stockholders equity of more than $75,000,000 in order to remain in compliance with NYSE continued listing
standards. NYSE notified us on February 17, 2009 that we are below compliance because as of February 13, 2009 our 30 trading-day average market capitalization was $61.9 million and our stockholders equity as of
December 31, 2008 was $67,447,000. We have 45 days from receipt of the notice from the NYSE to submit a plan to them and demonstrate our ability to achieve compliance with continued listing standards within 18 months. We intend to submit such a
plan. During this time our common stock will continue to be listed on the NYSE, subject to our compliance with other NYSE continued listing requirements. If we are not able to regain compliance with NYSE listing standards, our stock will be delisted
from trading on the NYSE. This would result in the need to find another market on which our stock can be listed or cause our stock to cease trading on an active market, which could result in a reduction in the liquidity for our stock and a reduction
in demand for our stock.



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It is our expectation that stock market conditions will improve and that we will either be able to
achieve compliance with NYSE continued listing standards or take the steps necessary to list our stock on another national securities exchange, such as NASDAQ or NYSE Alternext. However, there can be no assurance that we will be able to do so and
our stock may ultimately trade on an over-the-counter market. Non-compliance with NYSE continued listing standards or delisting from the NYSE could negatively impact us, including, without limitation, our relationships with stockholders, businesses
and lenders, our access to debt and equity financing, and our ability to attract and retain personnel by means of equity compensation. This, in turn, could materially and adversely affect our business, financial condition and results of operations.
Securities traded in the over-the-counter market generally have significantly less liquidity than securities traded on a national securities exchange, through factors such as a reduction in the number of investors that will consider investing in the
securities, the number of market makers in the securities, reduction in securities analyst and news media coverage and lower market prices than might otherwise be obtained.



|Item 7A. | Quantitative And Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

We are exposed to financial market risk resulting from changes in interest rates. We do not engage in speculative or leveraged transactions, nor hold or issue financial instruments for trading purposes.

At December 31, 2008, we have marketable securities of $406,000. These securities, which consist of mutual funds, are classified as
available-for-sale and reported at fair-value in our consolidated balance sheet. Fair-value is determined based on the current market values.

At December 31, 2008, there was $42,200,000 outstanding under our revolving credit agreement. The credit agreement bears interest at our option, upon LIBOR plus a margin that varies between 125 and 200 basis points depending on the
leverage ratio or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%) plus a margin that varies between -50 and +25 basis points depending on the leverage ratio. Therefore, we are subject to interest rate risk on the
variable component of the interest rate. Historically, we managed our mix of fixed and variable-rate debt by structuring the terms of our debt agreements. Effective October 21, 2005, we entered into a $37,500,000 interest rate swap agreement
that effectively converted this portion of the outstanding variable-rate borrowings under the revolving credit agreement to fixed-rate securities, thereby hedging against the impact of potential interest rate changes. Under this agreement, we pay a
fixed interest rate of 4.74%. In return, the issuing lender refunds to us the variable-rate interest paid to the bank group under our revolving credit agreement on the same notional principal amount, excluding the margin that varies between 125 and
200 basis points depending on the leverage ratio. The notional amount of the swap agreement decreased to $30,000,000 on November 1, 2006, to $20,000,000 on November 1, 2007, and to $10,000,000 on November 1, 2008. The agreement
terminates on November 1, 2009. As of December 31, 2008, the interest rate swap had a negative fair value of $360,000. An increase in interest rates of one percent would result in the interest rate swap having a negative fair value of
approximately $284,000 at December 31, 2008. A decrease in interest rates of one percent would result in the interest rate swap having a negative fair value of approximately $435,000 at December 31, 2008. A change in interest rates will
have no impact on the interest expense associated with the $10,000,000 of borrowings under the revolving credit agreement that are subject to the interest rate swap agreement. A change in interest rates of one percent on the outstanding borrowings
under the revolving credit agreement at December 31, 2008 not subject to the interest rate swap would cause a change in total annual interest costs of $322,000. The borrowings under our revolving credit agreement bear interest at the variable
rate described above and therefore approximate fair value at December 31, 2008.

At December 31, 2008, our outstanding balance of
the SWIDA bonds had a carrying value of $4,101,000 and an estimated fair value of $4,499,000. The fair value was determined through the use of a discounted cash flow methodology applying interest rates which we believe would be available to us for
issues with similar terms at December 31, 2008.

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued
$25,900,000 in Variable Rate Tax Exempt Infrastructure Revenue Bonds, of which $22,300,000 was outstanding at December 31, 2008. These bonds are direct obligations of the Sports Authority and are therefore not recorded on our consolidated
balance sheet; however, we are exposed to market risks related to fluctuations in interest rates for these bonds. A significant increase in interest rates could result in our being responsible for debt service payments not covered by the sales and
incremental property taxes generated from the facility.



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|Item 8. | Financial Statements And Supplementary Data
|------- | -------------------------------------------

Our consolidated financial statements and the Report of Independent Registered Public Accounting Firm included in this report are shown on the Index to Consolidated Financial Statements on page 34.



|Item 9. | Changes In And Disagreements With Accountants On Accounting And Financial Disclosure
|------- | ------------------------------------------------------------------------------------

None.



|Item 9A. | Controls and Procedures
|-------- | -----------------------

Our management is
responsible for the preparation, integrity and objectivity of the consolidated financial statements and other financial information included in this Form 10-K. The consolidated financial statements have been prepared in conformity with U.S.
generally accepted accounting principles and reflect the effects of certain estimates and judgments made by management.

Our management
also is responsible for establishing and maintaining a system of internal controls designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with managements
authorization. The system is regularly monitored by direct management review and by internal auditors who conduct an extensive program of audits throughout our organization. The Director of Internal Audit reports directly to the Audit Committee of
our Board of Directors. We have confidence in our financial reporting, the underlying system of internal controls, and our people, who are objective in their responsibilities and operate under our Code of Business Conduct and with the highest level
of ethical standards. These standards are a key element of our control system.

The Audit Committee of our Board of Directors, which is
comprised entirely of independent directors, has direct and private access to and meets regularly with management, our internal auditors and our independent registered public accounting firm to review accounting, reporting, auditing and internal
control matters.

Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls
will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide
absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because
of changes in business conditions, or that the degree of compliance with the policies or procedure may deteriorate.

(a) Evaluation of Disclosure
Controls and Procedures

We have established disclosure controls and procedures to ensure that relevant, material information is made
known to the officers who certify our financial reports and to other members of senior management and the Board of Directors.

Based on
their evaluation as of December 31, 2008, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)
are effective to ensure that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules
and forms.



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(b) Managements Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. We conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the framework in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation,
management concluded that our internal control over financial reporting was effective as of December 31, 2008. KPMG LLP independently assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. KPMG
LLP has issued their report which is included herein.

(c) Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter ended December 31, 2008 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

(d) Report of Independent Registered Public
Accounting Firm

The Board of Directors and Stockholders

Dover Motorsports, Inc.:

We have audited Dover Motorsports, Inc.s (the Companys) internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is
responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Report on Internal Control
Over Financial Reporting (Item 9A(b)). Our responsibility is to express an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys
internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of
its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Dover
Motorsports, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).



25



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##### Table of Contents

We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated balance sheets of Dover Motorsports, Inc. and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations and comprehensive (loss) earnings and cash flows for each
of the years in the three-year period ended December 31, 2008, and our report dated March 6, 2009 expressed an unqualified opinion on those consolidated financial statements.

KPMG LLP



|                          
|--------------------------
|Philadelphia, Pennsylvania
|March 6, 2009             



|Item 9B. | Other Information
|-------- | -----------------

None.

Part III



|Item 10. | Directors, Executive Officers And Corporate Governance
|-------- | ------------------------------------------------------

Except as presented below, biographical information relating to our directors and executive officers, information regarding our audit committee financial experts and information on Section 16(a) Beneficial
Ownership Reporting Compliance called for by this Item 10 are incorporated by reference to our Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 29, 2009.

We have a Code of Business Conduct applicable to all of our employees, including our Chief Executive Officer and Chief Financial Officer. We also have a
Code of Business Conduct and Ethics for Directors and Executive Officers and Related Party Transactions Policy applicable to all directors and executive officers. Copies of these Codes and other corporate governance documents are available on our
website at http://www.dovermotorsports.com under the heading, Investor Relations. We will post on our website any amendments to, or waivers from, these Codes as required by law.

Executive Officers of the Registrant. As of December 31, 2008, our executive officers were:



|                    |  |                                                       |  |     |  |               
|------------------- |  | ----------------------------------------------------- |  | --- |  | --------------
|Name                |  | Position                                              |  | Age |  | Term of Office
|                    |  |                                                       | 
|Denis McGlynn       |  | President andChief Executive Officer                  |  | 62  |  | 11/79 to date 
|                    |  |                                                       | 
|Michael A. Tatoian  |  | Executive Vice President                              |  | 48  |  | 01/07 to date 
|                    |  |                                                       | 
|Timothy R. Horne    |  | Sr. Vice President-Financeand Chief Financial Officer |  | 42  |  | 4/08 to date  
|                    |  |                                                       | 
|Klaus M. Belohoubek |  | Sr. Vice President-GeneralCounsel and Secretary       |  | 49  |  | 7/99 to date  
|                    |  |                                                       | 
|Thomas Wintermantel |  | Treasurer andAssistant Secretary                      |  | 50  |  | 7/02 to date  

Our Chairman of the Board, Henry B. Tippie, is a non-employee director and, therefore, not an
executive officer. Mr. Tippie has served as Chairman of the Board for 9 years and prior to that served as Vice Chairman of the Board. Mr. Tippie also serves as Chairman of the Board to Gaming as a non-employee director.



26



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##### Table of Contents

Denis McGlynn has served as our President and Chief Executive Officer for 29 years. Mr. McGlynn also
serves as President and Chief Executive Officer to Gaming.

Michael A. Tatoian joined us as Executive Vice President in January 2007.
Mr. Tatoian has more than 20 years experience in professional sports ownership, management and operations. He served as Chief Executive Officer and Managing Partner of Victory Sports Group, LLC, where he oversaw the development and management
of professional sports organizations, including minor league baseball, minor league hockey and a NASCAR Nationwide Series team. Mr. Tatoian also served as Chief Operating Officer of United Sports Ventures, Inc., an umbrella sports company that
owned and operated eight minor league teams.

Timothy R. Horne has been Sr. Vice President-Finance and Chief Financial Officer since April
2008. Patrick J. Bagley was Sr. Vice President-Finance and Chief Financial Officer from May 2002 until April 1, 2008. Effective April 1, 2008, Mr. Bagley retired as an officer of Dover Motorsports, Inc. and the Board of Directors
appointed Mr. Horne to succeed Mr. Bagley. Mr. Bagley remains a member of our Board of Directors. Mr. Horne was the Chief Financial Officer of Dover Motorsports, Inc. from 1996 until its 2002 spin-off of Gaming. He has served as
Sr. Vice President-Finance, Treasurer and Chief Financial Officer of Gaming since 2002, but has been actively involved in the financial departments of both companies.

Klaus M. Belohoubek has been Sr. Vice President-General Counsel and Secretary since 1999 and has provided us legal representation in various capacities since 1990. Mr. Belohoubek also serves as Sr. Vice
President-General Counsel and Secretary of Gaming.

Thomas Wintermantel has been Treasurer and Assistant Secretary since July 2002.
Previously, Mr. Wintermantel was the Financial Vice President and Treasurer of John W. Rollins & Associates, Financial Vice President of Rollins Jamaica, Ltd. and President and Director of the John W. Rollins Foundation.



|Item 11. | Executive Compensation
|-------- | ----------------------

The
information called for by this Item 11 is incorporated by reference to our Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 29, 2009.



|Item 12. | Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------

The information called for by this Item 12 is incorporated by reference to our Proxy Statement to be filed pursuant to Regulation 14A for the Annual
Meeting of Stockholders to be held on April 29, 2009.

Equity Compensation Plan Information

We have a 1996 stock option plan (the 1996 Plan) which provided for the grant of stock options to our officers and key employees. Our Board
of Directors froze the 1996 Plan and no additional option grants may be made under the 1996 Plan. We have a 2004 stock incentive plan (the 2004 Plan) which provides for the grant of up to 1,500,000 shares of common stock to our officers
and key employees through stock options and/or awards valued in whole or in part by reference to our common stock, such as restricted stock awards. Refer to NOTE 9  Stockholders Equity of the consolidated financial statements included
elsewhere in this document for further discussion.



27



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##### Table of Contents

Securities authorized for issuance under equity compensation plans at December 31, 2008 are as
follows:



|                                                           |  |                                                                                       |  |                                                                         |  |                                                                                                                                      
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------
|Plan Category                                              |  | Number ofsecurities to beissued uponexercise ofoutstandingoptions, warrantsand
rights |  | Weighted-averageexercise price ofoutstandingoptions, warrantsand rights |  | Number of securitiesremaining available forfuture issuance underequity compensationplans
(excludingsecurities reflected incolumn (a))
|                                                           |  | (a)                                                                                   |  | (b)                                                                     |  | (c)                                                                                                                                  
|Equity compensation plans approved by security holders     |  | 523,001                                                                               |  | $5.78                                                                   |  | 1,005,917                                                                                                                            
|Equity compensation plans not approved by security holders |  |                                                                                      |  |                                                                        |  |                                                                                                                                     
|                                                           |  |                                                                                       |  |                                                                         |  |                                                                                                                                      
|Total                                                      |  | 523,001                                                                               |  | $5.78                                                                   |  | 1,005,917                                                                                                                            
|                                                           |  |                                                                                       |  |                                                                         |  |                                                                                                                                      



|Item 13. | Certain Relationships And Related Transactions, And Director Independence
|-------- | -------------------------------------------------------------------------

The information called for by this Item 13 is incorporated by reference to our Proxy Statement to be filed pursuant to Regulation 14A for the Annual
Meeting of Stockholders to be held on April 29, 2009.



|Item 14. | Principal Accounting Fees And Services
|-------- | --------------------------------------

The information called for by this Item 14 is incorporated by reference to our Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 29, 2009.

Part IV



|Item 15. | Exhibits, Financial Statement Schedules
|-------- | ---------------------------------------



|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|(a)(1) |  | Financial Statements  See accompanying Index to Consolidated Financial Statements on page 34.                                                                                                                                                                                                                                                                                                                                                                                          
|       | 
|(2)    |  | Financial Statement Schedules  None.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 
|(3)    |  | Exhibits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | 
|2.1    |  | Share Exchange Agreement and Plan of Reorganization dated June 14, 1996 between Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.), Dover Downs, Inc., Dover Downs
International Speedway, Inc. and the shareholders of Dover Downs, Inc. (incorporated herein by reference to Exhibit 2.1 to the Registration Statement, Number 333-8147, on Form S-1 dated July 15, 1996, which was declared effective on
October 3, 1996).                                  
|       | 
|2.2    |  | Agreement and Plan of Merger, dated as of March 26, 1998, by and among Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.), FOG Acquisition Corp., and Grand Prix
Association of Long Beach (incorporated herein by reference to Exhibit 2.1 to the Registration Statement, Number 333-53077, on Form S-4 dated May 19, 1998).                                                                                                                                  
|       | 
|2.3    |  | Amended and Restated Agreement Regarding Distribution and Plan of Reorganization, dated as of February 15, 2002, by and between Dover Motorsports, Inc. (formerly known as Dover Downs
Entertainment, Inc.) and Dover Downs Gaming & Entertainment, Inc. (incorporated herein by reference to Exhibit 2.1 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated
February 26, 2002, which was declared effective on March 7, 2002).



28



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##### Table of Contents

|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Restated Certificate of Incorporation of Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.), dated March 10, 2000 (incorporated herein by reference to Exhibit 3.1
to the Quarterly Report on Form 10-Q dated April 28, 2000).                                                                                                                                                                                                                                                                                                       
|     | 
|3.2  |  | Amended and Restated By-laws of Dover Motorsports, Inc. dated April 1, 2002 (incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q dated May 10, 2002).                                                                                                                                                                                                                                                                                                                                                                        
|     | 
|4.1  |  | Rights Agreement dated as of June 14, 1996 between Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.) and ChaseMellon Shareholder Services, L.L.C. (incorporated
herein by reference to Exhibit 4.2 to the Registration Statement, Number 333-8147, on Form S-1 dated July 15, 1996, which was declared effective on October 3, 1996).                                                                                                                                                                                               
|     | 
|10.1 |  | Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services Corporation, Memphis
International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc. and Grand Prix Association of Long Beach, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 17, 2004 (incorporated
herein by reference to Exhibit 10.1 to the Annual Report on Form 10-K dated March 10, 2004).                          
|     | 
|10.2 |  | Amendment No. 2 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc. and Grand Prix Association of Long Beach, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of July 28,
2004 (incorporated herein by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q dated August 6, 2004).    
|     | 
|10.3 |  | Amendment No. 3 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc. and Grand Prix Association of Long Beach, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 16,
2005 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 25, 2005).
|     | 
|10.4 |  | Amendment No. 4 to Credit Agreement among, Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc., Midwest Racing, Inc., Mercantile-Safe Deposit and Trust Company, as agent, and various other lenders, dated as of August 5,
2005 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K dated August 8, 2005).            
|     | 
|10.5 |  | Amendment No. 5 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., and Nashville Speedway, USA, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of October 12, 2005 (incorporated herein by reference to
Exhibit 10.1 to the Current Report on Form 8-K dated October 12, 2005).                                             
|     | 
|10.6 |  | Amendment No. 6 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., and Nashville Speedway, USA, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of May 8, 2006 (incorporated herein by reference to
Exhibit 10.6 to the Annual Report on Form 10-K dated March 6, 2007).                                                     
|     | 
|10.7 |  | Amendment No. 7 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., and Nashville Speedway, USA, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of November 8, 2006 (incorporated herein by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q dated November 9, 2006).                                          



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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.8  |  | Amendment No. 8 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Memphis International Motorsports
Corporation, and Nashville Speedway, USA, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of May 1, 2007 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated May 4,
2007).    
|      | 
|10.9  |  | Amendment No. 9 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Memphis International Motorsports
Corporation, and Nashville Speedway, USA, Inc. and PNC Bank, National Association, as agent, dated as of May 21, 2008 (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K dated May 22, 2008).                
|      | 
|10.10 |  | Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.) 1996 Stock Option Plan (incorporated herein by reference to Exhibit 10.8 to the Registration Statement, Number
333-8147, on Form S-1 dated July 15, 1996, which was declared effective on October 3, 1996).                                                                                                                                                     
|      | 
|10.11 |  | Employee Benefits Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.) and Dover Downs Gaming &
Entertainment, Inc. (incorporated herein by reference to Exhibit 10.2 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared effective on
March 7, 2002).          
|      | 
|10.12 |  | Transition Support Services Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.) and Dover Downs
Gaming & Entertainment, Inc. (incorporated herein by reference to Exhibit 10.3 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared
effective on March 7, 2002).
|      | 
|10.13 |  | Tax Sharing Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.) and Dover Downs Gaming &
Entertainment, Inc. (incorporated herein by reference to Exhibit 10.4 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared effective on
March 7, 2002).                
|      | 
|10.14 |  | Real Property Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.) and Dover Downs Gaming &
Entertainment, Inc. (incorporated herein by reference to Exhibit 10.5 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared effective on
March 7, 2002).              
|      | 
|10.15 |  | Sanction Agreement between Dover International Speedway, Inc. and National Association for Stock Car Auto Racing for May 2009 Sprint Cup Series event (incorporated herein by reference to Exhibit
10.1 to the Current Report on Form 8-K dated December 19, 2008).                                                                                                                                                                         
|      | 
|10.16 |  | Sanction Agreement between Dover International Speedway, Inc. and National Association for Stock Car Auto Racing for September 2009 Sprint Cup Series event (incorporated herein by reference to
Exhibit 10.2 to the Current Report on Form 8-K dated December 19, 2008).                                                                                                                                                                   
|      | 
|10.17 |  | Amended and Restated Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Denis McGlynn dated February 13, 2006 (incorporated herein by reference to Exhibit 10.1 to the
Current Report on Form 8-K dated February 17, 2006).                                                                                                                                                                                           
|      | 
|10.18 |  | Amended and Restated Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Michael A. Tatoian dated July 26, 2007
(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K dated July 26, 2007).                                                                                                                                                                                              



30



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.19 |  | Amended and Restated Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Klaus M. Belohoubek dated February 13, 2006 (incorporated herein by reference to Exhibit 10.4
to the Current Report on Form 8-K dated February 17, 2006).                                                                                                                                                                                                                                                                                                
|      | 
|10.20 |  | Amended and Restated Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Thomas G. Wintermantel dated February 13, 2006 (incorporated herein by reference to Exhibit
10.5 to the Current Report on Form 8-K dated February 17, 2006).                                                                                                                                                                                                                                                                                             
|      | 
|10.21 |  | Amended and Restated Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Timothy R. Horne dated January 3, 2008 (incorporated herein by reference to Exhibit 10.1 to the
Current Report on Form 8-K dated January 4, 2008).                                                                                                                                                                                                                                                                                                       
|      | 
|10.22 |  | Non-Compete Agreement between Dover Motorsports, Inc. and Henry B. Tippie dated June 16, 2004 (incorporated herein by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q dated
August 6, 2004).                                                                                                                                                                                                                                                                                                                                            
|      | 
|10.23 |  | Amendment to certain agreements between Dover Motorsports, Inc. and selected executives and directors (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated
November 5, 2008).                                                                                                                                                                                                                                                                                                                                  
|      | 
|10.24 |  | Dover Motorsports, Inc. 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit A to our Proxy Statement filed on March 29, 2004).                                                                                                                                                                                                                                                                                                                                                                                                      
|      | 
|10.25 |  | Form of Incentive Stock Option Agreement Used with Dover Motorsports, Inc. 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated
November 3, 2004).                                                                                                                                                                                                                                                                                                                                   
|      | 
|10.26 |  | Form of Restricted Stock Grant Agreement Used with Dover Motorsports, Inc. 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q dated
November 3, 2004).                                                                                                                                                                                                                                                                                                                                   
|      | 
|10.27 |  | Asset Purchase Agreement between Grand Prix Association of Long Beach, Inc. and Aquarium Asset Management, LLC dated May 23, 2005 (incorporated herein by reference to Exhibit 10.1 to the
Current Report on Form 8-K dated May 26, 2005).                                                                                                                                                                                                                                                                                                             
|      | 
|10.28 |  | Lenders Consent Letter, dated May 23, 2005, under the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports
Corporation, Gateway International Services Corporation, Memphis International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc., Grand Prix Association of Long Beach, Inc. and Mercantile-Safe Deposit and Trust
Company, as agent (incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K dated May 26, 2005).
|      | 
|10.29 |  | Stock Purchase Agreement dated January 28, 2009 between Midwest Racing, Inc. and Gulf Coast Entertainment, L.L.C. (incorporated herein by reference to Exhibit 10.1 to the Current Report on
Form 8-K dated January 30, 2009).                                                                                                                                                                                                                                                                                                                         
|      | 
|10.30 |  | Description of Annual Salary and Certain Discretionary Incentives to Executive Officers (incorporated herein by reference to Item 1.01 to the Current Report on Form 8-K dated
January 5, 2009).                                                                                                                                                                                                                                                                                                                                                       
|      | 
|21.1  |  | Subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|      | 
|23.1  |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|      | 
|24.1  |  | Powers of Attorney for Directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|      | 
|31.1  |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    



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|     |  |                                                                                                                                                
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)                                                                            
|     | 
|32.1 |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Sec. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
|     | 
|32.2 |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Sec. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
|     | 
|99.1 |  | Audit Committee Charter of Dover Motorsports, Inc. (incorporated herein by reference to Exhibit A to our Proxy Statement dated March 30, 2007).



32



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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |  |  |                         |  |     |  |                                   
|-------------------- |  |  |  | ----------------------- |  | --- |  | ----------------------------------
|DATED: March 6, 2009 |  |  |  | Dover Motorsports, Inc.
|                     |  |  |  |                         |  |     |  | Registrant                        
|                     |  |  |  |                        
|                     |  |  |  |                         |  | BY: |  | /s/ Denis McGlynn                 
|                     |  |  |  |                         |  |     |  | Denis McGlynn                     
|                     |  |  |  |                         |  |     |  | President, Chief Executive Officer
|                     |  |  |  |                         |  |     |  | and Director                      

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



|                                      |  |                                                       |  |              
|------------------------------------- |  | ----------------------------------------------------- |  | -------------
|                                      |  |                                                      
|/s/ Timothy R. Horne Timothy R. Horne |  | Sr. Vice President-Financeand Chief Financial Officer |  | March 6, 2009

The Directors of the registrant (listed below) executed a power of attorney appointing Denis
McGlynn and Timothy R. Horne their attorneys-in-fact, empowering them to sign this report on their behalf.

Henry B. Tippie, Chairman of the Board

Kenneth K. Chalmers, Director and Chairman of the Audit Committee

Patrick J. Bagley, Director

John W. Rollins, Jr.,Director

Jeffrey W. Rollins, Director

R. Randall Rollins, Director

Eugene W. Weaver, Director



|                                |  |                                 |  |              
|------------------------------- |  | ------------------------------- |  | -------------
|                                |  |                                
|/s/ Denis McGlynn Denis
McGlynn |  | As Attorney-in-Factand Director |  | March 6, 2009



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##### Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                              |  |     
|----------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                              |  | Page
|                                                                                                                              | 
|Report of Independent Registered Public Accounting Firm                                                                       |  | 35  
|                                                                                                                              | 
|Consolidated Statements of Operations and Comprehensive (Loss) Earnings for the years ended December 
31, 2008, 2007 and 2006 |  | 36  
|                                                                                                                              | 
|Consolidated Balance Sheets at December 31, 2008 and 2007                                                                     |  | 37  
|                                                                                                                              | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006                                    |  | 38  
|                                                                                                                              | 
|Notes to the Consolidated Financial Statements                                                                                |  | 39  



34



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Dover Motorsports, Inc.:

We have audited the accompanying consolidated balance sheets of Dover Motorsports, Inc. and subsidiaries (the Company) as of
December 31, 2008 and 2007, and the related consolidated statements of operations and comprehensive (loss) earnings and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial
statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Dover Motorsports, Inc. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008, in conformity
with U.S. generally accepted accounting principles.

As discussed in Notes 2 and 8 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, on December 31, 2006; and Financial Accounting Standards
Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, effective January 1, 2007.

We also have
audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Dover Motorsports, Inc.s internal control over financial reporting as of December 31, 2008, based on criteria established in
Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 6, 2009 expressed an unqualified opinion on the effectiveness of the
Companys internal control over financial reporting.

KPMG LLP

Philadelphia, Pennsylvania

March 6, 2009



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DOVER MOTORSPORTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (LOSS) EARNINGS

(in thousands, except per share data)



|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                                                                                  |  | Years ended December 31, |       
|                                                                                                                                                  |  | 2008                     |        |   | 2007 |   |        | 2006 | 
|Revenues:                                                                                                                                         |  |                          |        |   |      |   |        |      |  |   |         |  
|Admissions                                                                                                                                        |  | $                        | 31,034 |   |      | $ | 33,923 |      |  | $ | 35,070  |  
|Event-related                                                                                                                                     |  |                          | 25,652 |   |      |   | 24,786 |      |  |   | 25,585  |  
|Broadcasting                                                                                                                                      |  |                          | 27,532 |   |      |   | 27,272 |      |  |   | 30,436  |  
|Other                                                                                                                                             |  |                          | 61     |   |      |   | 71     |      |  |   | 183     |  
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|                                                                                                                                                  |  |                          | 84,279 |   |      |   | 86,052 |      |  |   | 91,274  |  
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|Expenses:                                                                                                                                         |  |                          |        |   |      |   |        |      |  |   |         |  
|Operating and marketing                                                                                                                           |  |                          | 55,262 |   |      |   | 55,621 |      |  |   | 54,178  |  
|Impairment charges                                                                                                                                |  |                          | 12,795 |   |      |   |       |      |  |   | 64,618  |  
|General and administrative                                                                                                                        |  |                          | 12,528 |   |      |   | 12,571 |      |  |   | 12,626  |  
|Depreciation and amortization                                                                                                                     |  |                          | 6,909  |   |      |   | 6,369  |      |  |   | 8,726   |  
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|                                                                                                                                                  |  |                          | 87,494 |   |      |   | 74,561 |      |  |   | 140,148 |  
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|Operating (loss) earnings                                                                                                                         |  |                          | (3,215 | ) |      |   | 11,491 |      |  |   | (48,874 | )
|Interest income                                                                                                                                   |  |                          | 83     |   |      |   | 186    |      |  |   | 95      |  
|Interest expense                                                                                                                                  |  |                          | (4,078 | ) |      |   | (4,335 | )    |  |   | (4,058  | )
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|(Loss) earnings before income tax benefit (expense)                                                                                               |  |                          | (7,210 | ) |      |   | 7,342  |      |  |   | (52,837 | )
|Income tax benefit (expense)                                                                                                                      |  |                          | 1,531  |   |      |   | (3,598 | )    |  |   | 17,492  |  
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|Net (loss) earnings                                                                                                                               |  |                          | (5,679 | ) |      |   | 3,744  |      |  |   | (35,345 | )
|Unrealized (loss) gain on interest rate swap, net of income tax benefit (expense) of $44, $174 and ($71) in 2008, 2007 and 2006, respectively     |  |                          | (64    | ) |      |   | (254   | )    |  |   | 105     |  
|Unrealized loss on available-for-sale securities, net of income tax benefit of $59 and $6 in 2008 and 2007, respectively                          |  |                          | (86    | ) |      |   | (9     | )    |  |   |        |  
|Change in pension net actuarial loss and prior service cost, net of income tax benefit (expense) of $932 and ($71) in 2008 and 2007,
respectively |  |                          | (1,360 | ) |      |   | 102    |      |  |   |        |  
|Change in minimum pension liability, net of income tax expense of $508                                                                            |  |                          |       |   |      |   |       |      |  |   | 737     |  
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|Comprehensive (loss) earnings                                                                                                                     |  | $                        | (7,189 | ) |      | $ | 3,583  |      |  | $ | (34,503 | )
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|Net (loss) earnings per common share:                                                                                                             |  |                          |        |   |      |   |        |      |  |   |         |  
|Basic                                                                                                                                             |  | $                        | (0.16  | ) |      | $ | 0.10   |      |  | $ | (0.98   | )
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  
|Diluted                                                                                                                                           |  | $                        | (0.16  | ) |      | $ | 0.10   |      |  | $ | (0.98   | )
|                                                                                                                                                  |  |                          |        |   |      |   |        |      |  |   |         |  

The Notes to the Consolidated Financial Statements are an integral part of these consolidated
statements.



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##### Table of Contents

DOVER MOTORSPORTS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)



|                                                                                                                                           |  |              |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                           |  | December 31, |        
|                                                                                                                                           |  | 2008         |         |   | 2007 |  
|ASSETS                                                                                                                                     |  |              |         |   |      |   |         |  
|Current assets:                                                                                                                            |  |              |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                  |  | $            | 288     |   |      | $ | 327     |  
|Accounts receivable                                                                                                                        |  |              | 1,950   |   |      |   | 1,722   |  
|Inventories                                                                                                                                |  |              | 273     |   |      |   | 185     |  
|Prepaid expenses and other                                                                                                                 |  |              | 1,697   |   |      |   | 1,773   |  
|Receivable from Dover Downs Gaming & Entertainment, Inc.                                                                                   |  |              | 11      |   |      |   | 18      |  
|Deferred income taxes                                                                                                                      |  |              | 152     |   |      |   | 186     |  
|                                                                                                                                           |  |              |         |   |      |   |         |  
|Total current assets                                                                                                                       |  |              | 4,371   |   |      |   | 4,211   |  
|Property and equipment, net                                                                                                                |  |              | 144,684 |   |      |   | 157,748 |  
|Restricted cash                                                                                                                            |  |              | 5,219   |   |      |   | 4,169   |  
|Other assets, net                                                                                                                          |  |              | 594     |   |      |   | 1,578   |  
|Deferred income taxes                                                                                                                      |  |              | 311     |   |      |   |        |  
|                                                                                                                                           |  |              |         |   |      |   |         |  
|Total assets                                                                                                                               |  | $            | 155,179 |   |      | $ | 167,706 |  
|                                                                                                                                           |  |              |         |   |      |   |         |  
|                                                                                                                                           |  |             
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                       |  |              |         |   |      |   |         |  
|Current liabilities:                                                                                                                       |  |              |         |   |      |   |         |  
|Accounts payable                                                                                                                           |  | $            | 604     |   |      | $ | 945     |  
|Accrued liabilities                                                                                                                        |  |              | 2,767   |   |      |   | 3,464   |  
|Income taxes payable                                                                                                                       |  |              | 159     |   |      |   | 257     |  
|Current portion of bonds payable                                                                                                           |  |              | 1,130   |   |      |   | 111     |  
|Deferred revenue                                                                                                                           |  |              | 6,962   |   |      |   | 8,689   |  
|                                                                                                                                           |  |              |         |   |      |   |         |  
|Total current liabilities                                                                                                                  |  |              | 11,622  |   |      |   | 13,466  |  
|Revolving line of credit                                                                                                                   |  |              | 42,200  |   |      |   | 42,300  |  
|Bonds payable                                                                                                                              |  |              | 2,971   |   |      |   | 4,098   |  
|Liability for pension benefits                                                                                                             |  |              | 2,555   |   |      |   | 736     |  
|Other liabilities                                                                                                                          |  |              | 1,920   |   |      |   | 1,202   |  
|Non current income taxes payable                                                                                                           |  |              | 9,630   |   |      |   | 9,687   |  
|Deferred income taxes                                                                                                                      |  |              | 16,834  |   |      |   | 20,101  |  
|                                                                                                                                           |  |              |         |   |      |   |         |  
|Total liabilities                                                                                                                          |  |              | 87,732  |   |      |   | 91,590  |  
|                                                                                                                                           |  |              |         |   |      |   |         |  
|                                                                                                                                           |  |             
|Commitments and contingencies (see Notes to the Consolidated Financial Statements)                                                         |  |              |         |   |      |   |         |  
|                                                                                                                                           |  |             
|Stockholders equity:                                                                                                                      |  |              |         |   |      |   |         |  
|Preferred stock, $.10 par value; 1,000,000 shares authorized; shares issued and outstanding: none                                          |  |              |        |   |      |   |        |  
|Common stock, $.10 par value; 75,000,000 shares authorized; shares issued and outstanding: 17,872,751 and 16,721,433,
respectively         |  |              | 1,787   |   |      |   | 1,672   |  
|Class A common stock, $.10 par value; 55,000,000 shares authorized; shares issued and outstanding: 18,510,975 and 19,514,975,
respectively |  |              | 1,851   |   |      |   | 1,952   |  
|Additional paid-in capital                                                                                                                 |  |              | 100,539 |   |      |   | 99,849  |  
|Accumulated deficit                                                                                                                        |  |              | (34,366 | ) |      |   | (26,503 | )
|Accumulated other comprehensive loss                                                                                                       |  |              | (2,364  | ) |      |   | (854    | )
|                                                                                                                                           |  |              |         |   |      |   |         |  
|Total stockholders equity                                                                                                                 |  |              | 67,447  |   |      |   | 76,116  |  
|                                                                                                                                           |  |              |         |   |      |   |         |  
|Total liabilities and stockholders equity                                                                                                 |  | $            | 155,179 |   |      | $ | 167,706 |  
|                                                                                                                                           |  |              |         |   |      |   |         |  

The Notes to the Consolidated Financial Statements are an integral part of these consolidated
statements.



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##### Table of Contents

DOVER MOTORSPORTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                                                    |  | Years ended December 31, |        
|                                                                                                                    |  | 2008                     |         |   | 2007 |   |         | 2006 | 
|Operating activities:                                                                                               |  |                          |         |   |      |   |         |      |  |   |         |  
|Net (loss) earnings                                                                                                 |  | $                        | (5,679  | ) |      | $ | 3,744   |      |  | $ | (35,345 | )
|Adjustments to reconcile net (loss) earnings to net cash provided by operating activities of continuing operations: |  |                          |         |   |      |   |         |      |  |   |         |  
|Depreciation and amortization                                                                                       |  |                          | 6,909   |   |      |   | 6,369   |      |  |   | 8,726   |  
|Amortization of credit facility fees                                                                                |  |                          | 175     |   |      |   | 183     |      |  |   | 186     |  
|Stock-based compensation                                                                                            |  |                          | 598     |   |      |   | 493     |      |  |   | 411     |  
|Deferred income taxes                                                                                               |  |                          | (2,544  | ) |      |   | 2,038   |      |  |   | (19,890 | )
|Impairment charges                                                                                                  |  |                          | 12,795  |   |      |   |        |      |  |   | 64,618  |  
|Changes in assets and liabilities:                                                                                  |  |                          |         |   |      |   |         |      |  |   |         |  
|Accounts receivable                                                                                                 |  |                          | (228    | ) |      |   | 1,213   |      |  |   | (569    | )
|Inventories                                                                                                         |  |                          | (88     | ) |      |   | 59      |      |  |   | (14     | )
|Prepaid expenses and other                                                                                          |  |                          | 50      |   |      |   | (567    | )    |  |   | 38      |  
|Receivable from/payable to                                                                                          |  |                          |         |   |      |   |         |      |  |   |         |  
|Dover Downs Gaming & Entertainment, Inc.                                                                            |  |                          | 7       |   |      |   | (9      | )    |  |   | (24     | )
|Accounts payable                                                                                                    |  |                          | (72     | ) |      |   | (993    | )    |  |   | 461     |  
|Accrued liabilities                                                                                                 |  |                          | (691    | ) |      |   | (216    | )    |  |   | (1,703  | )
|Income taxes payable                                                                                                |  |                          | (120    | ) |      |   | (221    | )    |  |   | 186     |  
|Deferred revenue                                                                                                    |  |                          | (1,727  | ) |      |   | (1,319  | )    |  |   | 486     |  
|Other liabilities                                                                                                   |  |                          | 663     |   |      |   | 795     |      |  |   | (42     | )
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash provided by operating activities of continuing operations                                                  |  |                          | 10,048  |   |      |   | 11,569  |      |  |   | 17,525  |  
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash used in operating activities of discontinued operation                                                     |  |                          |        |   |      |   |        |      |  |   | (144    | )
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Investing activities:                                                                                               |  |                          |         |   |      |   |         |      |  |   |         |  
|Capital expenditures                                                                                                |  |                          | (6,577  | ) |      |   | (11,279 | )    |  |   | (6,331  | )
|Restricted cash                                                                                                     |  |                          | (1,050  | ) |      |   | (485    | )    |  |   | (484    | )
|Purchase of available-for-sale securities                                                                           |  |                          | (50     | ) |      |   |        |      |  |   |        |  
|Proceeds from the sale of corporate aircraft, net                                                                   |  |                          |        |   |      |   |        |      |  |   | 4,098   |  
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash used in investing activities of continuing operations                                                      |  |                          | (7,677  | ) |      |   | (11,764 | )    |  |   | (2,717  | )
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Financing activities:                                                                                               |  |                          |         |   |      |   |         |      |  |   |         |  
|Borrowings from revolving line of credit                                                                            |  |                          | 38,600  |   |      |   | 40,400  |      |  |   | 37,900  |  
|Repayments on revolving line of credit                                                                              |  |                          | (38,700 | ) |      |   | (37,100 | )    |  |   | (48,000 | )
|Repayments of bonds payable                                                                                         |  |                          | (108    | ) |      |   | (697    | )    |  |   | (872    | )
|Dividends paid                                                                                                      |  |                          | (2,184  | ) |      |   | (2,176  | )    |  |   | (2,179  | )
|Repurchase of common stock                                                                                          |  |                          | (137    | ) |      |   | (54     | )    |  |   | (1,954  | )
|Proceeds from stock options exercised                                                                               |  |                          | 216     |   |      |   |        |      |  |   |        |  
|Credit facility fees                                                                                                |  |                          | (124    | ) |      |   | (159    | )    |  |   | (220    | )
|Excess tax benefit on stock awards                                                                                  |  |                          | 27      |   |      |   | 10      |      |  |   | 16      |  
|Other                                                                                                               |  |                          |        |   |      |   |        |      |  |   | (10     | )
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net cash (used in) provided by financing activities of continuing operations                                        |  |                          | (2,410  | ) |      |   | 224     |      |  |   | (15,319 | )
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Net (decrease) increase in cash and cash equivalents                                                                |  |                          | (39     | ) |      |   | 29      |      |  |   | (655    | )
|Cash and cash equivalents, beginning of year                                                                        |  |                          | 327     |   |      |   | 298     |      |  |   | 953     |  
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Cash and cash equivalents, end of year                                                                              |  | $                        | 288     |   |      | $ | 327     |      |  | $ | 298     |  
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Supplemental information:                                                                                           |  |                          |         |   |      |   |         |      |  |   |         |  
|Interest paid                                                                                                       |  | $                        | 3,380   |   |      | $ | 3,545   |      |  | $ | 4,004   |  
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  
|Income tax payments                                                                                                 |  | $                        | 1,107   |   |      | $ | 1,775   |      |  | $ | 2,209   |  
|                                                                                                                    |  |                          |         |   |      |   |         |      |  |   |         |  

The Notes to the Consolidated Financial Statements are an integral part of these consolidated
statements.



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##### Table of Contents

DOVER MOTORSPORTS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 Business Operations

References in this document to we, us and our mean Dover Motorsports, Inc. and/or its wholly owned subsidiaries, as
appropriate.

Dover Motorsports, Inc. is a public holding company that is a leading
marketer and promoter of motorsports entertainment in the United States. Our motorsports subsidiaries operate four motorsports tracks in three states and we promoted 15 major events during 2008 under the auspices of three of the premier sanctioning
bodies in motorsportsthe National Association for Stock Car Auto Racing (NASCAR), the Indy Racing League (IRL) and the National Hot Rod Association (NHRA). We own and operate Dover International
Speedway® in Dover, Delaware; Gateway International Raceway® near St. Louis, Missouri; Memphis Motorsports Park® in Memphis, Tennessee; and Nashville Superspeedway® near Nashville, Tennessee.

In 2008, we promoted the following major events:



| |  |  | 2 NASCAR Sprint Cup Series events;
| | - |  | ----------------------------------



| |  |  | 6 NASCAR Nationwide Series events;
| | - |  | ----------------------------------



| |  |  | 4 NASCAR Camping World Truck Series events (formerly known as Craftsman Truck Series);
| | - |  | --------------------------------------------------------------------------------------



| |  |  | 1 IRL event; and
| | - |  | ----------------



| |  |  | 2 NHRA events.
| | - |  | --------------

Additionally, we
promoted a NASCAR Camping World East Series (formerly known as Busch East Series) event at Dover International Speedway in connection with our September NASCAR event weekend.

We derive a substantial portion of our revenues from admissions, event-related and broadcasting revenues attributable to our NASCAR-sanctioned events at
Dover International Speedway which were held in June and September for all years presented in these consolidated financial statements. Total revenues from these events were approximately 70% of total revenues for each of the years in the three year
period ended December 31, 2008.

Our wholly-owned subsidiary, Midwest Racing, Inc. (Midwest Racing), entered into a stock
purchase agreement dated January 28, 2009, to sell Memphis Motorsports Park to Gulf Coast Entertainment, L.L.C (Gulf Coast). Under the terms of the agreement, Midwest Racing will sell all of the stock of its wholly-owned subsidiary,
Memphis International Motorsports Corporation, the owner of Memphis Motorsports Park, to Gulf Coast for $10,000,000 in cash and a two percent non-dilutable interest in Gulf Coast. Gulf Coast is the owner of Alabama Motorsports Park, a proposed
multi-use entertainment complex expected to be constructed in Mobile, Alabama. Closing is expected to take place on or before April 30, 2009 and is subject to financing and customary closing conditions. In March 2009, we received a $100,000
non-refundable deposit towards the purchase price.

We promoted 1 NASCAR Nationwide Series event, 1 NASCAR Camping World Truck Series event
and 1 NHRA event in 2008 at our Memphis location. Although we will no longer own the Memphis facility after the close of the sale, we expect to enter into an agreement with Gulf Coast to provide management services for the Memphis and Alabama
facilities.

NOTE 2  Summary of Significant Accounting Policies

Basis of consolidation and presentationThe accompanying consolidated financial statements include the accounts of Dover Motorsports, Inc. and our wholly owned subsidiaries. Intercompany transactions and
balances have been eliminated.



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##### Table of Contents

Cash equivalentsWe consider as cash equivalents all highly-liquid investments with an
original maturity of three months or less.

InvestmentsInvestments, which consist of mutual funds, are classified as
available-for-sale and reported at fair-value in other assets in our consolidated balance sheets. Changes in fair value are reported in other comprehensive income (loss). See NOTE 9  Stockholders Equity and NOTE 10  Financial
Instruments for further discussion.

Accounts receivableAccounts receivable are stated at their estimated collectible
amount and do not bear interest.

InventoriesInventories of items for resale are stated at the lower of cost or market with
cost being determined on the first-in, first-out basis.

Derivative instruments and hedging activitiesWe are subject to
interest rate risk on the variable component of the interest rate under our revolving credit agreement. Effective October 21, 2005, we entered into a $37,500,000 interest rate swap agreement. The notional amount of the swap agreement decreased
to $30,000,000 on November 1, 2006, to $20,000,000 on November 1, 2007, and to $10,000,000 on November 1, 2008. The agreement terminates on November 1, 2009. We have designated the interest rate swap as a cash flow hedge. Changes
in the fair value of the effective portion of the interest rate swap are recognized in other comprehensive (loss) income until the hedged item is recognized in earnings. See NOTE 6  Long-Term Debt and NOTE 10  Financial Instruments for
further discussion.

Property and equipmentProperty and equipment is stated at cost. Depreciation is provided for financial
reporting purposes using the straight-line method over the following estimated useful lives:



|                                  |  |            
|--------------------------------- |  | -----------
|Facilities                        |  | 10-40 years
|Furniture, fixtures and equipment |  | 5-10 years 

Impairment of long-lived assetsWe evaluate our long-lived assets other than goodwill
in accordance with the provisions of FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Long-lived assets other than goodwill are assessed for impairment whenever events or changes in circumstances
indicate that the carrying value may not be recoverable. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. Generally, fair value is determined using valuation techniques such as the sales
approach and for facilities the cost approach, which gives specific consideration to the value of the land plus contributory value to the improvements. See NOTE 3  Impairment Charges for further discussion.

Interest capitalizationInterest is capitalized in connection with the construction of major facilities. The capitalized interest is
amortized over the estimated useful life of the asset to which it relates. No interest was capitalized during the year ended December 31, 2008. During the years ended December 31, 2007 and 2006, respectively, we incurred $4,482,000 and
$4,115,000 of interest cost, of which $147,000 and $57,000 was capitalized.

Income taxesDeferred income taxes are provided on
all differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements based upon enacted statutory tax rates in effect at the balance sheet date. We record a valuation allowance to reduce
our deferred tax assets when uncertainty regarding their realizability exists. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

As further discussed in NOTE 7
 Income Taxes, we adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes(FIN 48), on January 1, 2007. We record interest related to unrecognized tax benefits in interest expense in the
consolidated statements of operations and other liabilities in the consolidated balance sheets.



40



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Revenue recognitionWe classify our revenues as admissions, event-related, broadcasting and
other. Admissions revenue includes ticket sales for all Company events. Event-related revenue includes amounts received from sponsorship fees; luxury suite rentals; hospitality tent rentals and catering; concessions and
souvenir sales and vendor commissions for the right to sell concessions and souvenirs at our facilities; sales of programs; track rentals and other event-related revenues. Broadcasting revenue includes rights fees obtained for television
and radio broadcasts of events held at our speedways and ancillary media rights fees. Other revenue includes all other miscellaneous revenues.

Revenues pertaining to specific events are deferred until the event is held. Concession and souvenir revenue are recorded at the time of sale. Revenues and related expenses from barter transactions in which we receive
advertising or other goods or services in exchange for sponsorships of motorsports events are recorded at fair value in accordance with Emerging Issues Task Force (EITF) Issue No. 99-17, Accounting for Advertising Barter
Transactions. Barter transactions accounted for $1,163,000, $1,240,000 and $1,207,000 of total revenues for the years ended December 31, 2008, 2007 and 2006, respectively.

Under the terms of our sanction agreements, NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR-sanctioned event as a
component of its sanction fees and remits the remaining 90% to the event promoter, which we record as revenue. The event promoter is required to pay 25% of the gross broadcast rights fees to the event as part of the awards to the competitors, which
we record as operating expenses.

We are responsible for collecting sales taxes from our customers on certain revenue generating activities
and remitting these taxes to the appropriate governmental taxing authority. We include sales taxes in admissions and event-related revenues in our consolidated statements of operations with an equal amount in operating and marketing expenses. Sales
taxes included in revenues and expenses for the years ended December 31, 2008, 2007 and 2006 were $578,000, $644,000 and $828,000, respectively.

Expense recognitionCertain direct expenses pertaining to specific events, including prize and point fund monies and sanction fees paid to various sanctioning bodies, including NASCAR, advertising and
other expenses associated with the promotion of our racing events are deferred until the event is held, at which point they are expensed.

The cost of non-event related advertising, promotion and marketing programs is expensed as incurred.

Advertising expenses were
$3,387,000, $3,299,000 and $2,755,000 in 2008, 2007 and 2006, respectively.

Net earnings (loss) per common shareWeighted
average shares used in computing basic and diluted net earnings (loss) per common share (EPS) are as follows:



|                              |  |                          |  |            |  |           
|----------------------------- |  | ------------------------ |  | ---------- |  | ----------
|                              |  | Years ended December 31,
|                              |  | 2008                     |  | 2007       |  | 2006      
|Basic EPS                     |  | 35,940,000               |  | 35,875,000 |  | 35,994,000
|Effect of dilutive securities |  |                         |  | 142,000    |  |          
|                              |  |                          |  |            |  |           
|Diluted EPS                   |  | 35,940,000               |  | 36,017,000 |  | 35,994,000
|                              |  |                          |  |            |  |           

Dilutive securities include stock options and nonvested stock awards.

For the years ended December 31, 2008, 2007 and 2006, options to purchase approximately 314,000, 238,000 and 303,000 shares of common stock,
respectively, were outstanding but not included in the computation of diluted EPS because the effect would be anti-dilutive. For the years ended December 31, 2008 and 2006, options to purchase 523,001 and 804,596 shares of common stock,
respectively, were outstanding but not included in the computation of diluted EPS because we had a net loss and all outstanding options would have been anti-dilutive. In addition, as a result of the net loss for the years ended December 31,
2008 and 2006, 425,400 and 266,200 shares of nonvested stock awards, respectively, were not included in the computation of diluted EPS as they would also have been anti-dilutive.

Accounting for stock-based compensationWe recorded total stock-based compensation expense of $598,000, $493,000 and $411,000 as general and
administrative expenses for the years ended December 31, 2008, 2007 and 2006, respectively. We recorded income tax benefits of $202,000, $150,000 and $95,000 for the years ended December 31, 2008, 2007 and 2006, respectively, related to
our nonvested restricted stock awards.



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Use of estimatesThe preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Segment informationWe account for our operating segment in accordance with FASB Statement No. 131, Disclosures About Segments of an Enterprise and Related Information. Statement No. 131 establishes guidelines
for public companies in determining operating segments based on those used for internal reporting to management. Based on these guidelines, we report information under a single motorsports segment.

Recent Accounting PronouncementsIn March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133. Statement No. 161 amends and expands the disclosure requirements of FASB Statement No. 133 with the intent to provide users of financial statements with an enhanced
understanding of how and why an entity uses derivative instruments, how derivative instruments and the related hedged items are accounted for under FASB Statement No. 133 and its related interpretations, and how derivative instruments and
related hedged items affect an entitys financial position, financial performance and cash flows. Statement No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.
We do not expect the adoption of Statement No. 161 to have a significant impact on our consolidated financial statements.

In
September 2006, the FASB issued Statement No. 157, Fair Value Measurements, which establishes a framework for measuring fair value and expands disclosures about fair value measurements. Statement No. 157 applies under other
accounting pronouncements that require or permit fair value measurements and, accordingly, Statement No. 157 does not require any new fair value measurements. Statement No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal years, for financial assets and liabilities that are measured at fair value on a recurring basis. In February 2008, the FASB issued FASB Staff Position (FSP)
157-2, Effective Date of FASB Statement No. 157, which delays the effective date of Statement No. 157s fair value measurement requirements for non-financial assets and liabilities that are not required or permitted to be
measured at fair value on a recurring basis to fiscal years beginning after November 15, 2008. Non-recurring non-financial assets and liabilities for which we have not applied the provisions of Statement No. 157 include our long-lived
assets measured at fair value for an impairment assessment under FASB Statement No. 144. The impact of adoption of Statement No. 157 for financial assets and liabilities is discussed in NOTE 10  Financial Instruments. We do not
expect the adoption of Statement No. 157 for non-recurring non-financial assets and liabilities to have a significant impact on our consolidated financial statements.

NOTE 3  Impairment Charges

Impairment Charges Recorded in 2008

Based upon the current economic conditions and their impact on our current and projected operations and cash flows, and the potential impact on land real
estate valuations, combined with the fact that there was no change in the allocation of broadcast revenues to the NASCAR Nationwide Series for 2009 (see Impairment Charges Recorded in 2006 below for further discussion), we concluded in the fourth
quarter that it was necessary for us to review the carrying value of the long-lived assets of each of our Midwest facilities, consisting of Nashville Superspeedway, Memphis Motorsports Park and Gateway International Raceway, for impairment. In
accordance with FASB Statement No. 144, the recoverability of assets to be held and used was measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. As
a result of the recoverability test, we concluded that the carrying amount of each of our Midwest facilities exceeded the undiscounted cash flows.



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Since the carrying amount of the assets exceeded the fair value, an impairment charge was recognized by
the amount by which the carrying amount of the assets exceeded the fair value. Fair value of the assets for Nashville and Gateway was determined using a valuation methodology that consisted of the cost approach, which gave specific consideration to
the value of the land plus contributory value to the improvements, and the comparable sales approach. Based upon the cost approach utilized for the valuations, there is an assumption that these two facilities will continue to operate as racetracks
and it is our intention to continue operating them unless it is determined that future prospects no longer justify such action. Fair value of the assets for Memphis was determined using a valuation methodology that considered the terms of the stock
purchase agreement with Gulf Coast (see NOTE 1) and the comparable sales approach. The long-lived assets deemed to be impaired consisted of track facilities. These facilities generated negative cash flows for several years and we expect that these
negative cash flows will continue as we monitor industry and Nationwide series changes made by NASCAR while continuing to reduce operating expenses and increase revenues.

Based on the results of this analysis, we recorded non-cash impairment charges in 2008 to write-down the carrying value of long-lived assets at our Midwest facilities to fair value, as follows:



|          |  |                                    |            |                                |   |                            |  |   |           
|--------- |  | ---------------------------------- | ---------- | ------------------------------ | - | -------------------------- |  | - | ----------
|          |  | Carrying Value ofLong-Lived Assets |            | Fair Value ofLong-Lived Assets |   | Non-CashImpairment Charges
|Nashville |  | $                                  | 54,640,000 |                                | $ | 51,500,000                 |  | $ | 3,140,000 
|Memphis   |  |                                    | 12,150,000 |                                |   | 10,000,000                 |  |   | 2,150,000 
|Gateway   |  |                                    | 17,505,000 |                                |   | 10,000,000                 |  |   | 7,505,000 
|          |  |                                    |            |                                |   |                            |  |   |           
|Total     |  | $                                  | 84,295,000 |                                | $ | 71,500,000                 |  | $ | 12,795,000
|          |  |                                    |            |                                |   |                            |  |   |           

Impairment Charges Recorded in 2006

Approximately one-third of our revenues are derived from the broadcast rights received through the arrangements that NASCAR has made with various
broadcast media. In October of 2006, NASCAR informed us of the amount of live broadcast revenue the industry expects to receive for each of the eight years beginning with the 2007 season under agreements that NASCAR has
reached with its various broadcast partners.

Industry live broadcast revenue in 2007 was approximately $505,000,000 for the NASCAR Sprint
Cup Series, NASCAR Nationwide Series and NASCAR Camping World Truck Series as compared with industry live broadcast revenue of approximately $576,000,000 in 2006. The average for the eight-year contract from 2007 through 2014 is $560,000,000, a 40%
increase over the average for the prior six-year contract of $400,000,000.

For the 2007 season, NASCAR allocated the live broadcast
revenue as follows: $473,437,500 or 93.75% to the NASCAR Sprint Cup Series; $29,037,500 or 5.75% to the NASCAR Nationwide Series; and $2,525,000 or 0.50% to the NASCAR Camping World Truck Series. The allocation for 2007 was not
significantly different than it was for the six years in the prior contract. NASCAR reserves the right in its sole discretion to make changes to this allocation in future years.

Management anticipated that the new contract would include an allocation of more of the broadcast revenue from the NASCAR Sprint Cup Series to the NASCAR
Nationwide Series. The cash flows of our three Midwest facilities are dependent upon sponsorships, admissions and live broadcast revenues, particularly from the NASCAR Nationwide Series. Because the allocation of live broadcast revenue for the
NASCAR Nationwide Series was less than anticipated, we concluded that it was necessary for us to review the long-lived assets of each of our three Midwest facilities for impairment. In accordance with FASB Statement No. 144, the recoverability
of assets to be held and used was measured by a comparison of the carrying amount of the asset to the estimated undiscounted future cash flows expected to be generated by the asset. As a result of the recoverability test, we concluded that the
carrying amount of each of our Midwest facilities exceeded the undiscounted cash flows.

Since the carrying amount of the asset exceeded
the fair value, an impairment charge was recognized by the amount by which the carrying amount of the assets exceeded the fair value. Fair value of the assets was determined using a valuation methodology that consisted of the cost approach, which
gave specific consideration to the value of the land plus contributory value to the improvements, and the comparable sales approach. Based upon the cost approach utilized for the valuations, there is an assumption that these three facilities will
continue to operate as racetracks and it is our intention to continue operating them unless it is determined that future prospects no longer justify such action. The long-lived assets deemed to be impaired consisted of track facilities.



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Based on the results of this analysis, we recorded non-cash impairment charges to write-down the carrying
value of long-lived assets at our Midwest facilities to fair value in 2006, as follows:



|          |  |                                    |             |                                |   |                            |  |   |           
|--------- |  | ---------------------------------- | ----------- | ------------------------------ | - | -------------------------- |  | - | ----------
|          |  | Carrying Value ofLong-Lived Assets |             | Fair Value ofLong-Lived Assets |   | Non-CashImpairment Charges
|Nashville |  | $                                  | 73,670,000  |                                | $ | 57,500,000                 |  | $ | 16,170,000
|Memphis   |  |                                    | 20,582,000  |                                |   | 12,700,000                 |  |   | 7,882,000 
|Gateway   |  |                                    | 54,557,000  |                                |   | 17,200,000                 |  |   | 37,357,000
|          |  |                                    |             |                                |   |                            |  |   |           
|Total     |  | $                                  | 148,809,000 |                                | $ | 87,400,000                 |  | $ | 61,409,000
|          |  |                                    |             |                                |   |                            |  |   |           

We accounted for goodwill in accordance with the provisions of FASB Statement No. 142,
Goodwill and Other Intangible Assets. Goodwill is not amortized but is subject to an annual (or under certain circumstances more frequent) impairment test based on its estimated fair value. Based on the factors noted above related to the
long-lived assets impairment, we completed an assessment of goodwill for potential impairment and determined that there was an impairment loss related to the goodwill balance of $2,487,000 associated with our Midwest operations. As a result of this
analysis, we also recorded a non-cash impairment charge of $2,487,000 in the third quarter of 2006 to write-down to zero the carrying value of our goodwill.

Additionally, on October 27, 2006 we sold our corporate aircraft. Since the fair value of the aircraft was less than its carrying value of $4,792,000, we recorded a non-cash impairment charge of $722,000 in the
third quarter of 2006. Net proceeds from the sale were $4,098,000.

NOTE 4  Property and Equipment

Property and equipment consists of the following as of December 31:



|                                  |  |      |             |   |      |   |             |  
|--------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                  |  | 2008 |             |   | 2007 |  
|Land                              |  | $    | 27,438,000  |   |      | $ | 28,403,000  |  
|Facilities                        |  |      | 141,151,000 |   |      |   | 153,396,000 |  
|Furniture, fixtures and equipment |  |      | 8,122,000   |   |      |   | 7,577,000   |  
|Construction in progress          |  |      | 61,000      |   |      |   | 1,645,000   |  
|                                  |  |      |             |   |      |   |             |  
|                                  |  |      | 176,772,000 |   |      |   | 191,021,000 |  
|Less accumulated depreciation     |  |      | (32,088,000 | ) |      |   | (33,273,000 | )
|                                  |  |      |             |   |      |   |             |  
|                                  |  | $    | 144,684,000 |   |      | $ | 157,748,000 |  
|                                  |  |      |             |   |      |   |             |  

Depreciation expense was $6,842,000, $6,302,000 and $8,684,000 for the years ended
December 31, 2008, 2007 and 2006, respectively.

NOTE 5  Accrued Liabilities

Accrued liabilities consist of the following as of December 31:



|                          |  |      |           |      |   |          
|------------------------- |  | ---- | --------- | ---- | - | ---------
|                          |  | 2008 |           | 2007
|Payroll and related items |  | $    | 601,000   |      | $ | 694,000  
|Real estate taxes         |  |      | 1,044,000 |      |   | 1,026,000
|Other                     |  |      | 1,122,000 |      |   | 1,744,000
|                          |  |      |           |      |   |          
|                          |  | $    | 2,767,000 |      | $ | 3,464,000
|                          |  |      |           |      |   |          



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NOTE 6  Long-Term Debt

Long-term debt consists of the following as of December 31:



|                         |  |      |            |   |      |   |            |  
|------------------------ |  | ---- | ---------- | - | ---- | - | ---------- | -
|                         |  | 2008 |            |   | 2007 |  
|Revolving line of credit |  | $    | 42,200,000 |   |      | $ | 42,300,000 |  
|SWIDA bonds              |  |      | 4,101,000  |   |      |   | 4,209,000  |  
|                         |  |      |            |   |      |   |            |  
|                         |  |      | 46,301,000 |   |      |   | 46,509,000 |  
|Less current portion     |  |      | (1,130,000 | ) |      |   | (111,000   | )
|                         |  |      |            |   |      |   |            |  
|                         |  | $    | 45,171,000 |   |      | $ | 46,398,000 |  
|                         |  |      |            |   |      |   |            |  

At December 31, 2008, Dover Motorsports, Inc. and all of its wholly owned subsidiaries, as
co-borrowers, were parties to a $73,000,000 unsecured revolving credit agreement with a bank group. The credit facility expires July 1, 2011. It provides for seasonal funding needs, capital improvements, letter of credit requirements and other
general corporate purposes. Interest is based, at our option, upon LIBOR plus a margin that varies between 125 and 200 basis points (200 basis points at December 31, 2008) depending on the ratio of funded debt to earnings before interest,
taxes, depreciation and amortization (the leverage ratio) or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%) plus a margin that varies between -50 and +25 basis points (+25 basis points at
December 31, 2008) depending on the leverage ratio, except that the base rate option is not available for the portion of indebtedness equal to the notional amount under the interest rate swap agreement described below. The terms of the credit
facility contain certain covenants including minimum tangible net worth, fixed charge coverage and maximum funded debt to earnings before interest, taxes, depreciation and amortization. In addition, the credit agreement includes a material adverse
change clause. The credit facility also provides that if we default under any other loan agreement, that would be a default under this credit facility. At December 31, 2008, we were in compliance with the terms of the credit facility.

Material adverse changes in our results of operations could impact our ability to maintain financial ratios necessary to satisfy these
requirements. There was $42,200,000 outstanding under the credit facility at December 31, 2008, at a weighted average interest rate of 4.09%. After consideration of stand-by letters of credit outstanding, borrowings of $8,126,000 were available
pursuant to the credit facility at December 31, 2008. Based on projected future results, we expect to be in compliance with all of the covenants for all measurement periods during the next twelve months.

Effective October 21, 2005, we entered into an interest rate swap agreement that effectively converted $37,500,000 of our variable-rate debt to a
fixed-rate basis, thereby hedging against the impact of potential interest rate changes on future interest expense. The notional amount of the swap agreement decreased to $30,000,000 on November 1, 2006, to $20,000,000 on November 1, 2007,
and to $10,000,000 on November 1, 2008. The agreement terminates on November 1, 2009. Under this agreement, we pay a fixed interest rate of 4.74%. In return, the issuing lender refunds to us the variable-rate interest paid to the bank
group under our revolving credit agreement on the same notional principal amount, excluding the margin that varies between 125 and 200 basis points depending on the leverage ratio.

In 1996, Midwest Racing, Inc. entered into an agreement (the SWIDA bonds) with Southwestern Illinois Development Authority
(SWIDA) to receive the proceeds from the Taxable Sports Facility Revenue Bonds, Series 1996 (Gateway International Motorsports Corporation Project), a Municipal Bond Offering, in the aggregate principal amount of $21,500,000,
of which $4,101,000 was outstanding at December 31, 2008. SWIDA loaned all of the proceeds from the Municipal Bond Offering to Midwest Racing for the purpose of the redevelopment, construction and expansion of Gateway International Raceway
(Gateway). The proceeds of the SWIDA bonds were irrevocably committed to complete construction of Gateway, to fund interest, to create a debt service reserve fund and to pay for the cost of issuance of the bonds. The repayment terms and
debt service reserve requirements of the bonds issued in the Municipal Bond Offering correspond to the terms of the SWIDA bonds. The bonds are being amortized through February 2012.

We have established certain restricted cash funds to meet debt service as required by the SWIDA bonds, which are held by the trustee (BNY Trust Company
of Missouri). At December 31 2008, $5,219,000 of cash and cash equivalents were restricted by the SWIDA bonds and are appropriately classified as a non-current asset in our consolidated balance sheet. The SWIDA bonds are secured by a first
mortgage lien on all the real property owned and a



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security interest in all property leased by Gateway. Also, the SWIDA bonds are unconditionally guaranteed by Midwest Racing. The SWIDA bonds bear interest at
a rate of 9.2%. Interest expense related to the SWIDA bonds was $382,000, $394,000 and $456,000 for the years ended December 31, 2008, 2007 and 2006, respectively. We have a stand-by letter of credit for $1,467,000, which is secured by a trust
deed on our facilities in Memphis, Tennessee, available to satisfy debt service reserve fund obligations. In addition, a portion of the property taxes to be paid by Gateway (if any) to the City of Madison Tax Incremental Fund have been pledged to
the annual retirement of debt and payment of interest. Refer to NOTE 12  Commitments and Contingencies.

The scheduled maturities of
long-term debt outstanding at December 31, 2008 are as follows: 2009-$1,130,000; 2010-$1,235,000; 2011-$43,545,000; 2012-$391,000.

NOTE 7 
Income Taxes

The current and deferred income tax (expense) benefit from continuing operations is as follows:



|                                   |  |                          |            |   |      |   |            |      |  |   |            |  
|---------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                   |  | Years ended December 31, |           
|                                   |  | 2008                     |            |   | 2007 |   |            | 2006 | 
|Current:                           |  |                          |            |   |      |   |            |      |  |   |            |  
|Federal                            |  | $                        |           |   |      | $ |           |      |  | $ | (8,000     | )
|State                              |  |                          | (1,013,000 | ) |      |   | (1,560,000 | )    |  |   | (2,390,000 | )
|                                   |  |                          |            |   |      |   |            |      |  |   |            |  
|                                   |  |                          | (1,013,000 | ) |      |   | (1,560,000 | )    |  |   | (2,398,000 | )
|                                   |  |                          |            |   |      |   |            |      |  |   |            |  
|Deferred:                          |  |                          |            |   |      |   |            |      |  |   |            |  
|Federal                            |  |                          | 2,982,000  |   |      |   | (1,923,000 | )    |  |   | 19,476,000 |  
|State                              |  |                          | (438,000   | ) |      |   | (115,000   | )    |  |   | 414,000    |  
|                                   |  |                          |            |   |      |   |            |      |  |   |            |  
|                                   |  |                          | 2,544,000  |   |      |   | (2,038,000 | )    |  |   | 19,890,000 |  
|                                   |  |                          |            |   |      |   |            |      |  |   |            |  
|Total income tax benefit (expense) |  | $                        | 1,531,000  |   |      | $ | (3,598,000 | )    |  | $ | 17,492,000 |  
|                                   |  |                          |            |   |      |   |            |      |  |   |            |  

A reconciliation of the effective income tax rate with the applicable statutory federal income tax
rate is as follows:



|                                    |  |                          |    |  |      |    |  |      |   
|----------------------------------- |  | ------------------------ | -- |  | ---- | -- |  | ---- | --
|                                    |  | Years ended December 31, |   
|                                    |  | 2008                     |    |  | 2007 |    |  | 2006 |   
|Federal tax at statutory rate       |  | 35.0                     | %  |  | 35.0 | %  |  | 35.0 | % 
|State taxes, net of federal benefit |  | 0.7                      | %  |  | 8.4  | %  |  | 2.5  | % 
|Valuation allowance                 |  | (13.8                    | %) |  | 6.5  | %  |  | (5.2 | %)
|Other                               |  | (0.7                     | %) |  | (0.9 | %) |  | 0.8  | % 
|                                    |  |                          |    |  |      |    |  |      |   
|Effective income tax rate           |  | 21.2                     | %  |  | 49.0 | %  |  | 33.1 | % 
|                                    |  |                          |    |  |      |    |  |      |   

Deferred income tax assets and liabilities are comprised of the following as of December 31:



|                                                      |  |      |             |   |      |   |             |  
|----------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                      |  | 2008 |             |   | 2007 |  
|Deferred income tax assets:                           |  |      |             |   |      |   |             |  
|Accruals not currently deductible for income taxes    |  | $    | 2,199,000   |   |      | $ | 905,000     |  
|Net operating loss carry-forwards                     |  |      | 11,894,000  |   |      |   | 8,975,000   |  
|                                                      |  |      |             |   |      |   |             |  
|Total deferred income tax assets                      |  |      | 14,093,000  |   |      |   | 9,880,000   |  
|                                                      |  |      |             |   |      |   |             |  
|Deferred income tax liabilities:                      |  |      |             |   |      |   |             |  
|Depreciation                                          |  |      | (22,107,000 | ) |      |   | (22,430,000 | )
|                                                      |  |      |             |   |      |   |             |  
|                                                      |  |      | (8,014,000  | ) |      |   | (12,550,000 | )
|Valuation allowance                                   |  |      | (8,357,000  | ) |      |   | (7,365,000  | )
|                                                      |  |      |             |   |      |   |             |  
|Net deferred income tax liability                     |  | $    | (16,371,000 | ) |      | $ | (19,915,000 | )
|                                                      |  |      |             |   |      |   |             |  
|Amounts recognized in theconsolidated balance sheets: |  |      |             |   |      |   |             |  
|Current deferred income tax assets                    |  | $    | 152,000     |   |      | $ | 186,000     |  
|Noncurrent deferred income tax assets                 |  |      | 311,000     |   |      |   |            |  
|Noncurrent deferred income tax liabilities            |  |      | (16,834,000 | ) |      |   | (20,101,000 | )
|                                                      |  |      |             |   |      |   |             |  
|                                                      |  | $    | (16,371,000 | ) |      | $ | (19,915,000 | )
|                                                      |  |      |             |   |      |   |             |  



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Deferred income taxes relate to the temporary differences between financial accounting income and taxable
income and are primarily attributable to differences between the book and tax basis of property and equipment and net operating loss carry-forwards (expiring through 2028). At December 31, 2008, we have available federal and state net operating
loss carryforwards of $3,339,000 and $230,078,000, respectively. Valuation allowances on state net operating loss carryforwards, net of federal tax benefit, increased in 2008, 2007 and 2006 by $992,000, $476,000 and $3,168,000, respectively. We
believe that it is more likely than not that the remaining deferred tax assets will be realized based upon reversals of existing taxable temporary differences.

We adopted the provisions of FIN 48 on January 1, 2007 and, as a result, recorded a liability for unrecognized income tax benefits of $8,718,000 and a corresponding decrease to noncurrent deferred income tax
liabilities. The unrecognized tax benefits relate to the appropriate period to depreciate certain of our assets and do not affect our effective income tax rate or our reported earnings. During 2008, our unrecognized income tax benefits decreased by
$57,000 to $9,630,000 solely related to prior year tax positions. During 2007, our unrecognized income tax benefits increased by $1,235,000 to $9,687,000 solely related to prior year tax positions. We estimate that our unrecognized tax benefits will
decrease by approximately $4,671,000 in 2009.

Interest expense related to FIN 48 was $610,000 and $645,000 in 2008 and 2007, respectively.
Total accrued interest as of December 31, 2008 and 2007, was $1,560,000 and $950,000, respectively, and was included in other liabilities in the consolidated balance sheet.

We file income tax returns with the Internal Revenue Service and the states in which we conduct business. We have identified the U.S. federal and state
of Delaware as our major tax jurisdictions. As of December 31, 2008, tax years after 2004 remain open to examination for the federal and Delaware jurisdictions.

NOTE 8  Pension Plan

We maintain a non-contributory tax qualified defined benefit pension
plan. All of our full time employees are eligible to participate in the qualified plan. Benefits provided by our qualified pension plan are based on years of service and employees remuneration over their employment period. Pension costs are
funded in accordance with the provisions of the Internal Revenue Code. We also maintain a non-qualified, non-contributory defined benefit pension plan for certain employees. This excess plan provides benefits that would otherwise be provided under
the qualified pension plan but for maximum benefit and compensation limits applicable under federal tax law. The cost associated with the excess plan is determined using the same actuarial methods and assumptions as those used for our qualified
pension plan.

The following table sets forth the plans funded status and amounts recognized in our consolidated balance sheets as of
December 31:



|                                               |  |      |            |   |      |   |           |  
|---------------------------------------------- |  | ---- | ---------- | - | ---- | - | --------- | -
|                                               |  | 2008 |            |   | 2007 |  
|Change in benefit obligation:                  |  |      |            |   |      |   |           |  
|Benefit obligation at beginning of year        |  | $    | 6,181,000  |   |      | $ | 5,801,000 |  
|Service cost                                   |  |      | 343,000    |   |      |   | 368,000   |  
|Interest cost                                  |  |      | 381,000    |   |      |   | 359,000   |  
|Actuarial loss (gain)                          |  |      | 94,000     |   |      |   | (235,000  | )
|Benefits paid                                  |  |      | (87,000    | ) |      |   | (116,000  | )
|Other                                          |  |      | (4,000     | ) |      |   | 4,000     |  
|                                               |  |      |            |   |      |   |           |  
|Benefit obligation at end of year              |  |      | 6,908,000  |   |      |   | 6,181,000 |  
|                                               |  |      |            |   |      |   |           |  
|Change in plan assets:                         |  |      |            |   |      |   |           |  
|Fair value of plan assets at beginning of year |  |      | 5,955,000  |   |      |   | 5,019,000 |  
|Actual return on plan assets                   |  |      | (1,734,000 | ) |      |   | 300,000   |  
|Employer contribution                          |  |      | 203,000    |   |      |   | 752,000   |  
|Benefits paid                                  |  |      | (87,000    | ) |      |   | (116,000  | )
|                                               |  |      |            |   |      |   |           |  
|Fair value of plan assets at end of year       |  |      | 4,337,000  |   |      |   | 5,955,000 |  
|                                               |  |      |            |   |      |   |           |  
|Unfunded status                                |  | $    | (2,571,000 | ) |      | $ | (226,000  | )
|                                               |  |      |            |   |      |   |           |  



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The following table presents the amounts recognized in our consolidated balance sheets as of
December 31:



|                               |  |      |            |   |      |   |          |  
|------------------------------ |  | ---- | ---------- | - | ---- | - | -------- | -
|                               |  | 2008 |            |   | 2007 |  
|Long term pension asset        |  | $    |           |   |      | $ | 532,000  |  
|Accrued benefit cost           |  |      | (16,000    | ) |      |   | (22,000  | )
|Liability for pension benefits |  |      | (2,555,000 | ) |      |   | (736,000 | )
|                               |  |      |            |   |      |   |          |  
|                               |  | $    | (2,571,000 | ) |      | $ | (226,000 | )
|                               |  |      |            |   |      |   |          |  

The accumulated benefit obligation for our pension plans was $6,269,000 and $5,555,000,
respectively, as of December 31, 2008 and 2007.

Amounts recognized in accumulated other comprehensive loss that have not yet been
recognized as components of net periodic benefit cost at December 31 are as follows:



|                   |  |      |           |      |   |          
|------------------ |  | ---- | --------- | ---- | - | ---------
|                   |  | 2008 |           | 2007
|Net actuarial loss |  | $    | 3,361,000 |      | $ | 1,046,000
|Prior service cost |  |      | 104,000   |      |   | 127,000  
|                   |  |      |           |      |   |          
|                   |  | $    | 3,465,000 |      | $ | 1,173,000
|                   |  |      |           |      |   |          

For the year ending December 31, 2009, we expect to recognize the following amounts as
components of net periodic benefit cost which are included in accumulated other comprehensive loss as of December 31, 2008:



|                   |  |   |        
|------------------ |  | - | -------
|Actuarial loss     |  | $ | 225,000
|Prior service cost |  |   | 23,000 
|                   |  |   |        
|                   |  | $ | 248,000
|                   |  |   |        

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for
pension plans with accumulated benefit obligations in excess of plan assets were $6,908,000, $6,269,000 and $4,337,000, respectively, as of December 31, 2008 and $754,000, $709,000 and $0, respectively, as of December 31, 2007.

We expect to contribute between $300,000 and $650,000 to our pension plans in 2009 in order to satisfy minimum statutory funding requirements.

Benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:



|          |  |   |          
|--------- |  | - | ---------
|2009      |  | $ | 148,000  
|2010      |  | $ | 165,000  
|2011      |  | $ | 239,000  
|2012      |  | $ | 323,000  
|2013      |  | $ | 359,000  
|2014-2018 |  | $ | 2,287,000

As of December 31, 2006, the assets of the plan exceeded the actuarial present value of
accumulated benefits and accrued pension liabilities. As a result, we reversed our minimum pension liability and recognized $1,245,000 ($737,000 after income taxes) as other comprehensive income. Because this adjustment had no cash impact, the
effect has been excluded from the accompanying consolidated statements of cash flows.



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The components of net periodic pension cost are as follows:



|                               |  |                          |          |   |      |   |          |      |  |   |          |  
|------------------------------ |  | ------------------------ | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                               |  | Years ended December 31, |         
|                               |  | 2008                     |          |   | 2007 |   |          | 2006 | 
|Service cost                   |  | $                        | 343,000  |   |      | $ | 368,000  |      |  | $ | 374,000  |  
|Interest cost                  |  |                          | 381,000  |   |      |   | 359,000  |      |  |   | 319,000  |  
|Expected return on plan assets |  |                          | (507,000 | ) |      |   | (446,000 | )    |  |   | (386,000 | )
|Recognized net actuarial loss  |  |                          | 20,000   |   |      |   | 62,000   |      |  |   | 105,000  |  
|Net amortization               |  |                          | 23,000   |   |      |   | 23,000   |      |  |   | 24,000   |  
|                               |  |                          |          |   |      |   |          |      |  |   |          |  
|                               |  | $                        | 260,000  |   |      | $ | 366,000  |      |  | $ | 436,000  |  
|                               |  |                          |          |   |      |   |          |      |  |   |          |  

The principal assumptions used to determine the net periodic pension cost for the years ended
December 31, 2008, 2007 and 2006, and the actuarial value of the benefit obligation at December 31, 2008 and 2007 (the measurement dates) for our pension plans are as follows:



|                                                 |  |                           |   |  |                    |   |  |      |   |  |      |   |  |      |  
|------------------------------------------------ |  | ------------------------- | - |  | ------------------ | - |  | ---- | - |  | ---- | - |  | ---- | -
|                                                 |  | Net Periodic Pension Cost |   |  | Benefit Obligation |  
|                                                 |  | 2008                      |   |  | 2007               |   |  | 2006 |   |  | 2008 |   |  | 2007 |  
|Weighted-average discount rate                   |  | 6.50                      | % |  | 6.15               | % |  | 5.85 | % |  | 6.15 | % |  | 6.50 | %
|Weighted-average rate of compensation increase   |  | 4.00                      | % |  | 4.00               | % |  | 4.00 | % |  | 4.00 | % |  | 4.00 | %
|Expected long-term rate of return on plan assets |  | 8.50                      | % |  | 8.50               | % |  | 9.00 | % |  | n/a  |   |  | n/a  |  

For 2008, we assumed a long-term rate of return on plan assets of 8.5%. In developing the 8.5%
expected long-term rate of return assumption, we considered our historical compounded return and reviewed asset class return expectations and long-term inflation assumptions.

Our pension plan asset allocation at December 31, 2008 and 2007, and target allocation for 2009 are as follows:



|                          |  |                           |   |  |                   |   |  |      |  
|------------------------- |  | ------------------------- | - |  | ----------------- | - |  | ---- | -
|                          |  | Percentage of Plan Assets |   |  | Target Allocation |  
|Asset Category            |  | 2008                      |   |  | 2007              |   |  | 2009 |  
|Equity mutual funds       |  | 70                        | % |  | 66                | % |  | 50   | %
|Fixed income mutual funds |  | 29                        | % |  | 29                | % |  | 40   | %
|Other                     |  | 1                         | % |  | 5                 | % |  | 10   | %
|                          |  |                           |   |  |                   |   |  |      |  
|Total                     |  | 100                       | % |  | 100               | % |  | 100  | %
|                          |  |                           |   |  |                   |   |  |      |  

Our investment goals are to maximize returns subject to specific risk management policies. Our
risk management policies permit investments in mutual funds, and prohibit direct investments in debt and equity securities and derivative financial instruments. We address diversification by the use of mutual fund investments whose underlying
investments are in domestic and international equity and fixed income securities. These mutual funds are readily marketable and can be sold to fund benefit payment obligations as they become payable.

We also maintain a defined contribution 401(k) plan that permits participation by substantially all employees.



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NOTE 9  Stockholders Equity

Changes in the components of stockholders equity are as follows (in thousands, except per share amounts):



|                                                                                                                                          |  |             |       |   |                    |   |       |                          |  |   |                                      |   |  |                                   |         |   |                      |   |      |   |  |   |      |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ----- | - | ------------------ | - | ----- | ------------------------ |  | - | ------------------------------------ | - |  | --------------------------------- | ------- | - | -------------------- | - | ---- | - |  | - | ---- | -
|                                                                                                                                          |  | CommonStock |       |   | Class ACommonStock |   |       | AdditionalPaid-inCapital |  |   | RetainedEarnings(AccumulatedDeficit) |   |  | AccumulatedOtherComprehensiveLoss |         |   | DeferredCompensation |  
|Balance at December 31, 2005                                                                                                              |  | $           | 1,650 |   |                    | $ | 1,992 |                          |  | $ | 101,757                              |   |  | $                                 | 9,453   |   |                      | $ | (737 | ) |  | $ | (838 | )
|Reclassification of deferred compensation upon adoption of FASB Statement No. 123R                                                        |  |             |      |   |                    |   |      |                          |  |   | (838                                 | ) |  |                                   |        |   |                      |   |     |   |  |   | 838  |  
|Net loss                                                                                                                                  |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   | (35,345 | ) |                      |   |     |   |  |   |     |  
|Dividends paid, $0.06 per share                                                                                                           |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   | (2,179  | ) |                      |   |     |   |  |   |     |  
|Issuance of restricted stock awards, net of forfeitures                                                                                   |  |             | 7     |   |                    |   |      |                          |  |   | (7                                   | ) |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Stock-based compensation                                                                                                                  |  |             |      |   |                    |   |      |                          |  |   | 411                                  |   |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Excess tax benefit on stock awards                                                                                                        |  |             |      |   |                    |   |      |                          |  |   | 16                                   |   |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Change in fair value of interest rate swap, net of income tax expense of $71                                                              |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | 105  |   |  |   |     |  
|Change in minimum pension liability, net of income tax expense of $508                                                                    |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | 737  |   |  |   |     |  
|Adoption of FASB Statement No. 158, net of income tax benefit of $549                                                                     |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | (798 | ) |  |   |     |  
|Repurchase and retirement of common stock                                                                                                 |  |             | (37   | ) |                    |   |      |                          |  |   | (1,917                               | ) |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Conversion of Class A common stock to common stock                                                                                        |  |             | 15    |   |                    |   | (15   | )                        |  |   |                                     |   |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Other                                                                                                                                     |  |             |      |   |                    |   |      |                          |  |   | (10                                  | ) |  |                                   |        |   |                      |   |     |   |  |   |     |  
|                                                                                                                                          |  |             |       |   |                    |   |       |                          |  |   |                                      |   |  |                                   |         |   |                      |   |      |   |  |   |      |  
|Balance at December 31, 2006                                                                                                              |  |             | 1,635 |   |                    |   | 1,977 |                          |  |   | 99,412                               |   |  |                                   | (28,071 | ) |                      |   | (693 | ) |  |   |     |  
|Net earnings                                                                                                                              |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   | 3,744   |   |                      |   |     |   |  |   |     |  
|Unrealized losses on available- for-sale securities, net of income tax benefit of $6                                                      |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | (9   | ) |  |   |     |  
|Change in fair value of interest rate swap, net of income tax benefit of $174                                                             |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | (254 | ) |  |   |     |  
|Amortization of net actuarial loss and prior service cost included in net periodic pension benefit cost, net of income tax expense of
$71 |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | 102  |   |  |   |     |  
|Dividends paid, $0.06 per share                                                                                                           |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   | (2,176  | ) |                      |   |     |   |  |   |     |  
|Issuance of restricted stock awards, net of forfeitures                                                                                   |  |             | 13    |   |                    |   |      |                          |  |   | (13                                  | ) |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Stock-based compensation                                                                                                                  |  |             |      |   |                    |   |      |                          |  |   | 493                                  |   |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Excess tax benefit on stock awards                                                                                                        |  |             |      |   |                    |   |      |                          |  |   | 10                                   |   |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Repurchase and retirement of common stock                                                                                                 |  |             | (1    | ) |                    |   |      |                          |  |   | (53                                  | ) |  |                                   |        |   |                      |   |     |   |  |   |     |  
|Conversion of Class A common stock to common stock                                                                                        |  |             | 25    |   |                    |   | (25   | )                        |  |   |                                     |   |  |                                   |        |   |                      |   |     |   |  |   |     |  
|                                                                                                                                          |  |             |       |   |                    |   |       |                          |  |   |                                      |   |  |                                   |         |   |                      |   |      |   |  |   |      |  
|Balance at December 31, 2007                                                                                                              |  |             | 1,672 |   |                    |   | 1,952 |                          |  |   | 99,849                               |   |  |                                   | (26,503 | ) |                      |   | (854 | ) |  |   |     |  



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|                                                                                               |  |             |       |   |                    |   |       |                          |  |   |                                      |   |  |                                   |         |   |                      |   |        |   |  |   |  
|---------------------------------------------------------------------------------------------- |  | ----------- | ----- | - | ------------------ | - | ----- | ------------------------ |  | - | ------------------------------------ | - |  | --------------------------------- | ------- | - | -------------------- | - | ------ | - |  | - | -
|                                                                                               |  | CommonStock |       |   | Class ACommonStock |   |       | AdditionalPaid-inCapital |  |   | RetainedEarnings(AccumulatedDeficit) |   |  | AccumulatedOtherComprehensiveLoss |         |   | DeferredCompensation
|Net loss                                                                                       |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   | (5,679  | ) |                      |   |       |   |  |   | 
|Unrealized losses on available- for-sale securities, net of income tax benefit of $59          |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | (86    | ) |  |   | 
|Change in fair value of interest rate swap, net of income tax benefit of $44                   |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | (64    | ) |  |   | 
|Change in pension net actuarial loss and prior service cost, net of income tax benefit of $932 |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   |        |   |                      |   | (1,360 | ) |  |   | 
|Dividends paid, $0.06 per share                                                                |  |             |      |   |                    |   |      |                          |  |   |                                     |   |  |                                   | (2,184  | ) |                      |   |       |   |  |   | 
|Proceeds from stock options exercised                                                          |  |             | 4     |   |                    |   |      |                          |  |   | 212                                  |   |  |                                   |        |   |                      |   |       |   |  |   | 
|Issuance of restricted stock awards, net of forfeitures                                        |  |             | 13    |   |                    |   |      |                          |  |   | (13                                  | ) |  |                                   |        |   |                      |   |       |   |  |   | 
|Stock-based compensation                                                                       |  |             |      |   |                    |   |      |                          |  |   | 598                                  |   |  |                                   |        |   |                      |   |       |   |  |   | 
|Excess tax benefit on stock awards                                                             |  |             |      |   |                    |   |      |                          |  |   | 27                                   |   |  |                                   |        |   |                      |   |       |   |  |   | 
|Repurchase and retirement of common stock                                                      |  |             | (3    | ) |                    |   |      |                          |  |   | (134                                 | ) |  |                                   |        |   |                      |   |       |   |  |   | 
|Conversion of Class A common stock to common stock                                             |  |             | 101   |   |                    |   | (101  | )                        |  |   |                                     |   |  |                                   |        |   |                      |   |       |   |  |   | 
|                                                                                               |  |             |       |   |                    |   |       |                          |  |   |                                      |   |  |                                   |         |   |                      |   |        |   |  |   |  
|Balance at December 31, 2008                                                                   |  | $           | 1,787 |   |                    | $ | 1,851 |                          |  | $ | 100,539                              |   |  | $                                 | (34,366 | ) |                      | $ | (2,364 | ) |  | $ | 
|                                                                                               |  |             |       |   |                    |   |       |                          |  |   |                                      |   |  |                                   |         |   |                      |   |        |   |  |   |  

Holders of common stock have one vote per share and holders of Class A common stock have ten
votes per share. There is no cumulative voting. Shares of Class A common stock are convertible at any time into shares of common stock on a share for share basis at the option of the holder thereof. Dividends on Class A common stock cannot
exceed dividends on common stock on a per share basis. Dividends on common stock may be paid at a higher rate than dividends on Class A common stock. The terms and conditions of each issue of preferred stock are determined by our Board of
Directors. No preferred shares have been issued.

We have adopted a rights plan with respect to our common stock and Class A common
stock which includes the distribution of rights to holders of such stock. The rights entitle the holder, upon the occurrence of certain events, to purchase additional stock. The rights are exercisable if a person, company or group acquires 10% or
more of the outstanding combined equity of common stock and Class A common stock or engages in a tender offer. We are entitled to redeem each right for $.005.

On July 28, 2004, our Board of Directors authorized the repurchase of up to 2,000,000 shares of our outstanding common stock. The purchases may be made in the open market or in privately negotiated transactions
as conditions warrant. The repurchase authorization has no expiration date, does not obligate us to acquire any specific number of shares and may be suspended at any time. No purchases of our equity securities were made pursuant to this
authorization during the years ended December 31, 2008 or 2007. During the year ended December 31, 2006, we purchased and retired 365,393 shares of our outstanding common stock at an average purchase price of $5.23 per share, not including
nominal brokerage commissions. At December 31, 2008, we had remaining repurchase authority of 1,634,607 shares.

During the years
ended December 31, 2008, 2007 and 2006, we purchased and retired 20,877, 10,151 and 4,843 shares of our outstanding common stock at an average purchase price of $6.56, $5.35 and $6.03 per share, respectively. These purchases were made from
employees in connection with the vesting of restricted stock awards under our 2004 Stock Incentive Plan and were not pursuant to the aforementioned repurchase authorization. Since the vesting of a restricted stock award is a taxable event to our
employees for which income tax withholding is required, the plan allows employees to surrender to us some of the shares that would otherwise have vested in satisfaction of their tax liability. The surrender of these shares is treated by us as a
purchase of the shares.



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We have a 1996 stock option plan (the 1996 Plan) which provided for the grant of stock
options to our officers and key employees. Under the 1996 Plan, option grants had to have an exercise price of not less than 100% of the fair market value of the underlying shares of common stock at the date of the grant. Stock options for 523,001
shares of common stock were outstanding under the 1996 Plan as of December 31, 2008. The options have eight-year terms and generally vest equally over a period of six years from the date of grant. Once the options are exercised, our plan
requires that the common stock be held a minimum of one year. Our Board of Directors has frozen the 1996 Plan and no additional option grants may be made under the 1996 Plan.

In April 2004, we established the 2004 Stock Incentive Plan (the 2004 Plan) which provides for the grant of up to 1,500,000 shares of our
common stock to our officers and key employees through stock options and/or awards, such as nonvested stock awards, valued in whole or in part by reference to our common stock. The nonvested stock vests an aggregate of twenty percent each year
beginning on the second anniversary date of the grant. The aggregate market value of the nonvested stock at the date of issuance is being amortized on a straight-line basis over the six-year service period. No stock options have been granted under
the 2004 Plan. As of December 31, 2008, there were 1,005,917 shares available for granting options or stock awards under the 2004 Plan.

Stock option activity for the year ended December 31, 2008 was as follows:



|                                 |  |                 |   |  |                               |      |                                                  |     |                         |   |  
|-------------------------------- |  | --------------- | - |  | ----------------------------- | ---- | ------------------------------------------------ | --- | ----------------------- | - | -
|                                 |  | Number ofShares |   |  | WeightedAverageExercise Price |      | WeightedAverageRemainingContractualTerm (in yrs) |     | AggregateIntrinsicValue
|Outstanding at December 31, 2007 |  | 669,482         |   |  | $                             | 5.69 |                                                  |     |                         |   |  
|Exercised                        |  | (42,995         | ) |  | $                             | 5.03 |                                                  |     |                         |   |  
|Forfeited                        |  | (16,000         | ) |  | $                             | 5.64 |                                                  |     |                         |   |  
|Expired                          |  | (87,486         | ) |  | $                             | 5.45 |                                                  |     |                         |   |  
|                                 |  |                 |   |  |                               |      |                                                  |     |                         |   |  
|Outstanding at December 31, 2008 |  | 523,001         |   |  | $                             | 5.78 |                                                  | 1.6 |                         | $ | 
|                                 |  |                 |   |  |                               |      |                                                  |     |                         |   |  
|Exercisable at December 31, 2008 |  | 474,789         |   |  | $                             | 5.89 |                                                  | 1.2 |                         | $ | 
|                                 |  |                 |   |  |                               |      |                                                  |     |                         |   |  

No stock options were granted during the three year period ending December 31, 2008. The
total intrinsic value of stock options exercised during the year ended December 31, 2008 was $47,000 on the exercise date. No stock options were exercised during the years ended December 31, 2007 and 2006.

Nonvested stock option activity for the year ended December 31, 2008 was as follows:



|                               |  |                 |   |  |                                     |     
|------------------------------ |  | --------------- | - |  | ----------------------------------- | ----
|                               |  | Number ofShares |   |  | WeightedAverageGrant DateFair Value
|Nonvested at December 31, 2007 |  | 105,383         |   |  | $                                   | 2.97
|Vested                         |  | (55,506         | ) |  | $                                   | 3.07
|Forfeited                      |  | (1,666          | ) |  | $                                   | 4.68
|                               |  |                 |   |  |                                     |     
|Nonvested at December 31, 2008 |  | 48,211          |   |  | $                                   | 2.89
|                               |  |                 |   |  |                                     |     

The total fair value of stock options vested during the years ended December 31, 2008, 2007
and 2006 was $170,000, $212,000 and $383,000, respectively. We recorded, within general and administrative expenses, compensation expense of $102,000, $125,000 and $177,000 related to stock options for the years ended December 31, 2008, 2007
and 2006, respectively. As of December 31, 2008, there was no unrecognized compensation cost related to nonvested stock options granted to employees under our stock incentive plans.



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Nonvested restricted stock activity for the year ended December 31, 2008 was as follows:



|                               |  |                 |   |  |                                     |     
|------------------------------ |  | --------------- | - |  | ----------------------------------- | ----
|                               |  | Number ofShares |   |  | WeightedAverageGrant DateFair Value
|Nonvested at December 31, 2007 |  | 357,000         |   |  | $                                   | 5.46
|Granted                        |  | 137,000         |   |  | $                                   | 6.60
|Vested                         |  | (56,800         | ) |  | $                                   | 5.46
|Forfeited                      |  | (11,800         | ) |  | $                                   | 5.71
|                               |  |                 |   |  |                                     |     
|Nonvested at December 31, 2008 |  | 425,400         |   |  | $                                   | 5.82
|                               |  |                 |   |  |                                     |     

The aggregate market value of the nonvested stock at the date of issuance is being amortized on a
straight-line basis over the six-year service period. The total fair value of shares vested during the years ended December 31, 2008, 2007 and 2006 was $310,000, $181,000 and $86,000, respectively. The grant-date fair value of nonvested stock
awards granted during the years ended December 31, 2008, 2007 and 2006 was $6.60, $5.15 and $6.25, respectively. We recorded compensation expense of $497,000, $368,000 and $234,000 related to nonvested stock awards for the years ended
December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, there was $1,728,000 of total unrecognized compensation cost related to nonvested stock awards granted to employees under our stock incentive plans. That cost is
expected to be recognized over a weighted-average period of 3.9 years.

On December 31, 2006, we adopted the provisions of Statement
No. 158,Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, which requires an employer to (a) recognize in its statement of financial position an asset for a plans overfunded status or a
liability for a plans underfunded status, (b) measure a plans assets and its obligations that determine its funded status as of the end of the employers fiscal year, and (c) recognize changes in the funded status of a
defined postretirement plan in the year in which the changes occur (reported in comprehensive income). As a result of adopting Statement No. 158, we decreased our prepaid pension assets by $1,071,000, decreased our intangible assets by
$77,000 and increased our pension liability by $199,000, which resulted in us recording an accumulated other comprehensive loss of $1,347,000 ($798,000 after income tax benefit) in our December 31, 2006 consolidated balance sheet. Additionally,
we reclassified $771,000 of our $782,000 pension liability from accrued liabilities (current) to liability for pension benefits (non-current). The adoption of Statement No. 158 did not have an impact on our 2006 consolidated statement of
earnings or cash flows.

As of December 31, 2008 and 2007, accumulated other comprehensive loss, net of income taxes, consists of the
following:



|                                                                                                                                                        |  |      |            |   |      |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | -------- | -
|                                                                                                                                                        |  | 2008 |            |   | 2007 |  
|Net actuarial loss and prior service cost not yet recognized in net periodic benefit cost, net of income taxes of $1,409,000 and $477,000,
respectively |  | $    | (2,056,000 | ) |      | $ | (696,000 | )
|Unrealized loss on interest rate swap, net of income taxes of $147,000 and $103,000, respectively                                                       |  |      | (213,000   | ) |      |   | (149,000 | )
|Accumulated unrealized loss on available-for-sale securities, net of income taxes of $65,000 and $6,000, respectively                                   |  |      | (95,000    | ) |      |   | (9,000   | )
|                                                                                                                                                        |  |      |            |   |      |   |          |  
|Accumulated other comprehensive loss                                                                                                                    |  | $    | (2,364,000 | ) |      | $ | (854,000 | )
|                                                                                                                                                        |  |      |            |   |      |   |          |  

NOTE 10  Financial Instruments

We adopted FASB Statement No. 157 effective January 1, 2008 for financial assets and liabilities measured on a recurring basis. Statement
No. 157 applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis. There was no impact from the adoption of Statement No. 157 to the consolidated financial statements. Statement
No. 157 requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurement be classified and disclosed in one of the following three
categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical,
unrestricted assets or liabilities;



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Level 2: Quoted prices in markets that are not active, or inputs which are observable,
either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation
techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table summarizes the valuation of our financial instruments by the Statement No. 157 pricing levels as of December 31, 2008:



|                              |  |       |          |   |                                        |   |                                            |  |   |                                        |   |  |   |  
|----------------------------- |  | ----- | -------- | - | -------------------------------------- | - | ------------------------------------------ |  | - | -------------------------------------- | - |  | - | -
|                              |  | Total |          |   | Quoted PricesIn ActiveMarkets(Level 1) |   | Significant OtherObservableInputs(Level 2) |  |   | SignificantUnobservableInputs(Level 3)
|Available-for-sale securities |  | $     | 406,000  |   |                                        | $ | 406,000                                    |  | $ |                                       |   |  | $ | 
|Interest rate swap            |  |       | (360,000 | ) |                                        |   |                                           |  |   | (360,000                               | ) |  |   | 

Our investments in available-for-sale securities are recorded at fair value based on quoted market
prices. These investments are included in other non-current assets on our consolidated balance sheets.

At December 31, 2008 and 2007,
there was $42,200,000 and $42,300,000, respectively, outstanding under our revolving credit agreement. The borrowings under our revolving credit agreement bear interest at the variable rate described in NOTE 6  Long-Term Debt and therefore
approximate fair value at December 31, 2008 and 2007, respectively. We are subject to interest rate risk on the variable component of the interest rate. Our risk management objective is to lock in the interest cash outflows on a portion of our
debt. As a result, as described in NOTE 6  Long-Term Debt, we entered into an interest rate swap agreement effectively converting a portion of the outstanding borrowings under the revolving credit agreement to a fixed-rate, thereby hedging
against the impact of potential interest rate changes on future interest expense. At December 31, 2008 and 2007, the interest rate swap had a negative fair value of $360,000 and $252,000, respectively, which is recorded in other liabilities.
The fair value of the interest rate swap was based on quotes from the issuer of the swap and represents the estimated amounts that we would expect to pay to terminate the swap.

The carrying amounts of other financial instruments reported in the balance sheet for current assets and current liabilities approximate their fair
values because of the short maturity of these instruments.

At December 31, 2008 and 2007, our outstanding SWIDA bonds had carrying
values of $4,101,000 and $4,209,000, respectively, and estimated fair values of $4,499,000 and $4,299,000, respectively. The fair values were determined through the use of a discounted cash flow methodology utilizing estimated interest rates that
would be available to us for borrowings with similar terms.

NOTE 11  Related Party Transactions

During the years ended December 31, 2008, 2007 and 2006, Dover Downs Gaming & Entertainment, Inc. (Gaming), a company related
through common ownership, allocated costs of $2,104,000, $1,873,000 and $1,614,000, respectively, to us for certain administrative and operating services. Additionally, we allocated costs of $295,000, $229,000 and $121,000, respectively, to Gaming
for the years ended December 31, 2008, 2007 and 2006. The allocations were based on an analysis of each companys share of the costs. In connection with our NASCAR event weekends at Dover International Speedway, Gaming provided certain
services, primarily catering, for which we were invoiced $1,237,000, $1,207,000 and $965,000, during the years ended December 31, 2008, 2007 and 2006, respectively. Additionally, we invoiced Gaming $434,000, $429,000 and $149,000 during 2008,
2007 and 2006, respectively, for a skybox suite, tickets and other services to the events. As of December 31, 2008 and 2007, our consolidated balance sheets included an $11,000 and $18,000 receivable from Gaming, respectively, for the
aforementioned items. We received payment for the receivables in January of 2009 and 2008, respectively. The net costs incurred by each company for these services are not necessarily indicative of the costs that would have been incurred if the
companies had been unrelated entities and/or had otherwise independently managed these functions; however, management believes that these costs are reasonable.



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Use by Gaming of our 5/8-mile harness racing track is under an easement from us which does not require
the payment of any rent. Under the terms of the easement, Gaming has exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down
rights for the two weeks before and after such period. The harness track is located on our property and is on the inside of our one-mile motorsports superspeedway. Gamings indoor grandstands are used by us at no charge in connection with our
motorsports events. We also lease our principal executive office space from Gaming. Various easements and agreements relative to access, utilities and parking have also been entered into between us and Gaming relative to our respective Dover,
Delaware facilities.

Henry B. Tippie, Chairman of our Board of Directors, controls in excess of fifty percent of our voting power.
Mr. Tippies voting control emanates from his direct and indirect holdings of common stock and Class A common stock and from his status as trustee of the RMT Trust, our largest stockholder. This means that Mr. Tippie has the
ability to determine the outcome of the election of directors and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power.

Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn, Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins and Henry B. Tippie are all Directors
of Dover Motorsports, Inc. and Gaming. Denis McGlynn is the President and Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior Vice President  General Counsel and Secretary of both companies and Timothy R. Horne is the
Senior Vice President  Finance and Chief Financial Officer of both companies. Mr. Tippie controls in excess of fifty percent of the voting power of Gaming.

In April of 2002, we spun-off our gaming business which was then owned by our subsidiary, Dover Downs Gaming & Entertainment, Inc. On a tax-free basis, we made a pro rata distribution
of all of the capital stock of Gaming to our stockholders. Our continuing operations subsequent to the spin-off consist solely of our motorsports activities.

In conjunction with the spin-off of Gaming by us, the two companies entered into various agreements that addressed the allocation of assets and
liabilities between the two companies and that define the companies relationship after the separation. Among these are the Real Property Agreement and the Transition Support Services Agreement.

The Real Property Agreement governs certain real property transfers, leases and easements affecting our Dover, Delaware facility.

The Transition Support Services Agreement provides for each of the two companies to provide each other with certain administrative and operational
services. The party receiving the services is required to pay for them within 30 business days after receipt of an invoice at rates agreed upon by the companies. The agreement may be terminated in whole or in part 90 days after the request of the
party receiving the services or 180 days after the request of the party providing the services.

NOTE 12  Commitments and Contingencies

We lease certain land at Gateway with leases expiring at various dates through 2070. We also lease equipment at our facilities with
leases expiring at various dates through 2013. Some of the leases are subject to annual adjustments based on increases in the consumer price index. Total rental payments charged to operations amounted to $365,000, $375,000 and $444,000 for the years
ended December 31, 2008, 2007 and 2006, respectively.



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The minimum lease payments due under these leases are as follows:



|           |  |   |          
|---------- |  | - | ---------
|2009       |  | $ | 312,000  
|2010       |  | $ | 219,000  
|2011       |  | $ | 187,000  
|2012       |  | $ | 171,000  
|2013       |  | $ | 161,000  
|Thereafter |  | $ | 3,687,000

In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in
Variable Rate Tax Exempt Infrastructure Revenue Bonds, Series 1999, to acquire, construct and develop certain public infrastructure improvements which benefit the operation of Nashville Superspeedway, of which $22,300,000 was outstanding at
December 31, 2008. Annual principal payments range from $600,000 in September 2009 to $1,600,000 in 2029 and are payable solely from sales taxes and incremental property taxes generated from the facility. These bonds are direct obligations of
the Sports Authority and are therefore not recorded on our consolidated balance sheet. If the sales taxes and incremental property taxes are insufficient for the payment of principal and interest on the bonds, we would become responsible for the
difference. In the event we were unable to make the payments, they would be made pursuant to a $22,674,000 irrevocable direct-pay letter of credit issued by our bank group. We are exposed to fluctuations in interest rates for these bonds. A
significant increase in interest rates could result in us being responsible for debt service payments not covered by the sales and incremental property taxes generated from the facility.

We believe that the sales taxes and incremental property taxes generated from the facility will continue to satisfy the necessary debt service
requirements of the bonds through the maturity date in 2029. As of December 31, 2008 and 2007, $549,000 and $535,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay the
remaining principal and interest due under the bonds. During 2008, we paid $1,165,000 into the sales and incremental property tax fund and $1,151,000 was deducted from the fund for principal and interest payments. If the debt service is not
satisfied from the sales and incremental property taxes generated from the facility, a portion of the bonds would become our liability. If we fail to maintain the letter of credit that secures the bonds or we allow an uncured event of default to
exist under our reimbursement agreement relative to the letter of credit, the bonds would be immediately redeemable.

We have employment,
severance and noncompete agreements with certain of our officers and directors under which certain change of control, severance and noncompete payments and benefits might become payable in the event of a change in our control, defined to include a
tender offer or the closing of a merger or similar corporate transactions. In the event of such a change in control and the subsequent termination of employment of all employees covered under these agreements, we estimate that the maximum contingent
liability would range from $7,600,000 to $9,200,000 depending on the tax treatment of the payments.

To the extent that any of the
potential payments or benefits due under the agreements constitute an excess parachute payment under the Internal Revenue Code and result in the imposition of an excise tax, each agreement requires that we pay the amount of such excise
tax plus any additional amounts necessary to place the officer or director in the same after-tax position as he would have been had no excise tax been imposed. We estimate that the tax gross ups that could be paid under the agreements in the event
the agreements were triggered due to a change of control could be between $1,000,000 and $2,600,000 and these amounts have been included in the maximum contingent liability disclosed above. This maximum tax gross up figure assumes that
none of the payments made after the hypothetical change in control would be characterized as reasonable compensation for services rendered. Each agreement with an executive officer provides that fifty percent of the monthly amount paid during the
term is paid in consideration of the executive officers non-compete covenants. The exclusion of these amounts would reduce the calculated amount of excess parachute payments subject to tax. We are unable to conclude whether the Internal
Revenue Service would characterize all or some of these non-compete payments as reasonable compensation for services rendered.

We are also
a party to ordinary routine litigation incidental to our business. Management does not believe that the resolution of any of these matters is likely to have a material adverse effect on our results of operations, financial position or cash flows.



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NOTE 13  Quarterly Results  (unaudited)



|                                      |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|------------------------------------- |  | -------- | ---------- | - | ------- | - | ------------ |  | -------------- | ---------- |  | - | ----------- | -
|                                      |  | March 31 |            |   | June 30 |   | September 30 |  | December 31(a) |           
|Year Ended December 31, 2008          |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|Revenues                              |  | $        | 2,512,000  |   |         | $ | 39,415,000   |  | $              | 39,791,000 |  | $ | 2,561,000   |  
|Operating (loss) earnings             |  | $        | (6,927,000 | ) |         | $ | 12,481,000   |  | $              | 10,804,000 |  | $ | (19,573,000 | )
|Net (loss) earnings                   |  | $        | (4,148,000 | ) |         | $ | 5,847,000    |  | $              | 4,699,000  |  | $ | (12,077,000 | )
|Net (loss) earnings per common share: |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|Basic                                 |  | $        | (0.12      | ) |         | $ | 0.16         |  | $              | 0.13       |  | $ | (0.34       | )
|                                      |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|Diluted                               |  | $        | (0.12      | ) |         | $ | 0.16         |  | $              | 0.13       |  | $ | (0.34       | )
|                                      |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|Year Ended December 31, 2007          |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|Revenues                              |  | $        | 882,000    |   |         | $ | 40,806,000   |  | $              | 40,951,000 |  | $ | 3,413,000   |  
|Operating (loss) earnings             |  | $        | (6,212,000 | ) |         | $ | 12,326,000   |  | $              | 11,875,000 |  | $ | (6,498,000  | )
|Net (loss) earnings                   |  | $        | (3,560,000 | ) |         | $ | 5,593,000    |  | $              | 5,187,000  |  | $ | (3,476,000  | )
|Net (loss) earnings per common share: |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|Basic                                 |  | $        | (0.10      | ) |         | $ | 0.16         |  | $              | 0.14       |  | $ | (0.10       | )
|                                      |  |          |            |   |         |   |              |  |                |            |  |   |             |  
|Diluted                               |  | $        | (0.10      | ) |         | $ | 0.16         |  | $              | 0.14       |  | $ | (0.10       | )
|                                      |  |          |            |   |         |   |              |  |                |            |  |   |             |  



|(a) | During the fourth quarter of 2008, we recorded non-cash impairment charges of $12,795,000 related to our long-lived assets. See NOTE 3  Impairment Charges.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

Per share data amounts for the quarters have each been calculated separately. Accordingly, quarterly amounts may not add to
the annual amounts due to differences in the average common shares outstanding during each period.



57