ARTICLES OF AMENDMENT
                                       TO
                            ARTICLES OF INCORPORATION
                                       OF
                          CHURCHILL DOWNS INCORPORATED

            Pursuant to the  provisions of Section  271B.10-060  of the Kentucky
Business  Corporation  Act, the  undersigned  corporation  adopts the  following
articles of amendment  to set forth the  preferences,  limitations  and relative
rights of a series of shares of its Preferred  Stock,  without par value,  under
Article VII of its Articles of Incorporation.

            FIRST: The name of the Corporation is Churchill Downs
Incorporated.

            SECOND: The text of the amendment determining the terms of
the series of shares of the Preferred Stock is as follows:

     I.  Designation  and Number of Shares.  This series of the Preferred  Stock
shall be designated as "Series 1998 Preferred Stock" (the "Series 1998 Preferred
Stock").  The number of shares  initially  issuable as the Series 1998 Preferred
Stock shall be 8,000;  provided,  however,  that,  if more than a total of 8,000
shares of Series 1998  Preferred  Stock shall be issuable  upon the  exercise of
Rights (the "Rights")  issued pursuant to the Rights Agreement dated as of March
19, 1998,  between the Corporation and Bank of Louisville,  as Rights Agent (the
"Rights Agreement"),  the Board of Directors of the Corporation,  shall, if then
permitted by the Kentucky  Business  Corporation  Act,  direct by  resolution or
resolutions  that Articles of Amendment of the Articles of  Incorporation of the
Corporation  be  properly  executed  and filed  with the  Secretary  of State of
Kentucky  providing  for the  total  number of shares  issuable  as Series  1998
Preferred   Stock  to  be  increased   (to  the  extent  that  the  Articles  of
Incorporation  then permit) to the largest number of whole shares (rounded up to
the nearest whole number) issuable upon exercise of such Rights.

II.   Dividends or Distributions.

      (a) Subject to the prior and  superior  rights of the holders of shares of
any other  series of  Preferred  Stock or other  class of  capital  stock of the
Corporation  ranking  prior and superior to the shares of Series 1998  Preferred
Stock  with  respect to  dividends,  the  holders  of shares of the Series  1998
Preferred  Stock shall be entitled to receive,  when,  as and if declared by the
Board of  Directors,  out of the  assets of the  Corporation  legally  available
therefor,  (I) annual  dividends  payable in cash on January 15 of each year, or
such other dates as the Board of  Directors  of the  Corporation  shall  approve
(each such date being referred to herein as an "Annual  Dividend Payment Date"),
commencing on the first Annual Dividend Payment Date after the first issuance of
a share or a fraction of a share of Series 1998 Preferred  Stock,  in the amount
of $.01 per whole share  (rounded to the nearest  cent),  less the amount of all
cash dividends declared on the

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Series 1998  Preferred  Stock  pursuant to the  following  clause (ii) since the
immediately preceding Annual Dividend Payment Date or, with respect to the first
Annual Dividend  Payment Date, since the first issuance of any share or fraction
of a share of Series 1998 Preferred  Stock (the total of which shall not, in any
event, be less than zero) and (ii) dividends payable in cash on the payment date
for each cash dividend declared on the Common Stock in an amount per whole share
(rounded  to the  nearest  cent)  equal to the  Formula  Number (as  hereinafter
defined) then in effect times the cash  dividends  then to be paid on each share
of Common Stock. In addition,  if the Corporation shall pay any dividend or make
any  distribution  on the Common Stock  payable in assets,  securities  or other
forms of non-cash consideration (other than dividends or distributions solely in
shares  of Common  Stock),  then,  in each  such  case,  the  Corporation  shall
simultaneously  pay or make on each  outstanding  whole  share  of  Series  1998
Preferred  Stock a dividend  or  distribution  in like kind equal to the Formula
Number then in effect times such dividend or  distribution  on each share of the
Common Stock.  As used herein,  the "Formula  Number" shall be 1,000;  provided,
however,  that,  if at any time after March 19, 1998,  excluding,  however,  the
two-for-one  stock split or stock dividend  declared by the Corporation on March
19,  1998,  the Corpora tion shall (x) declare or pay any dividend on the Common
Stock payable in shares of Common Stock or make any  distribution  on the Common
Stock in shares of Common  Stock,  (y) subdivide (by a stock split or otherwise)
the outstanding  shares of Common Stock into a larger number of shares of Common
Stock or (z) combine (by a reverse  stock split or  otherwise)  the  outstanding
shares of Common Stock into a smaller number of shares of Common Stock, then, in
each such event, the Formula Number shall be adjusted to a number  determined by
multiplying  the Formula Number in effect  immediately  prior to such event by a
fraction,  the  numerator  of which is the number of shares of Common Stock that
are outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that are outstanding  immediately prior to such
event (and  rounding  the result to the  nearest  whole  number);  and  provided
further,  that, if at any time after March 19, 1998, the Corporation shall issue
any shares of its capital stock in a merger,  share exchange,  reclassification,
or change of the outstanding  shares of Common Stock,  then, in each such event,
the Formula Number shall be appropriately adjusted to reflect such merger, share
exchange,  reclassification  or  change so that each  share of  Preferred  Stock
continues to be the economic  equivalent of a Formula Number of shares of Common
Stock prior to such merger, share exchange, reclassification or change.

      (b) The Corporation shall declare a dividend or distribution on the Series
1998 Preferred Stock as provided in Section II(a) immediately prior to or at the
same time it declares a dividend or distribution on the Common Stock (other than
a dividend or distribution solely in shares of Common Stock); provided, however,
that,  in the event no  dividend  or  distribution  (other  than a  dividend  or
distribution  in shares of Common  Stock) shall have been declared on the Common
Stock during the period  between any Annual  Dividend  Payment Date and the next
subsequent  Annual  Dividend  Payment  Date, a dividend of $.01 per share on the
Series 1998 Preferred Stock shall

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nevertheless  be payable on such subsequent  Annual  Dividend  Payment Date. The
Board of  Directors  may fix a record date for the  determination  of holders of
shares of Series  1998  Preferred  Stock  entitled  to  receive  a  dividend  or
distribution declared thereon, which record date shall be the same as the record
date for any corresponding dividend or distribution on the Common Stock.

      (c)  Dividends  shall  begin to accrue and be  cumulative  on  outstanding
shares of Series 1998 Preferred Stock from and after the Annual Dividend Payment
Date next  preceding  the date of  original  issue of such shares of Series 1998
Preferred  Stock;  provided,  however,  that  dividends  on such shares that are
originally  issued  after the record  date for the  determination  of holders of
shares of Series 1998 Preferred Stock entitled to receive an annual dividend and
on or prior to the next succeeding  Annual Dividend  Payment Date shall begin to
accrue and be  cumulative  from and after such  Annual  Dividend  Payment  Date.
Notwithstanding  the  foregoing,  dividends  on shares of Series 1998  Preferred
Stock that are originally  issued prior to the record date for the determination
of holders  of shares of Series  1998  Preferred  Stock  entitled  to receive an
annual dividend on the first Annual Dividend Payment Date shall be calculated as
if cumulative  from and after the last day of the fiscal  quarter next preceding
the date of original issuance of such shares. Accrued but unpaid dividends shall
not bear interest.  Dividends paid on the shares of Series 1998 Preferred  Stock
in an amount less than the total  amount of such  dividends  at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share basis
among all such  shares at the time  outstanding  and  entitled  to receive  such
dividends.

      (d) So  long  as any  shares  of  the  Series  1998  Preferred  Stock  are
outstanding,  no dividends  or other  distributions  shall be declared,  paid or
distributed,  or set aside for  payment or  distribution,  on the Common  Stock,
unless, in each case, the dividend required by this Section II to be declared on
the Series 1998 Preferred Stock shall have been declared and paid.

      (e) The holders of the shares of Series 1998 Preferred  Stock shall not be
entitled to receive any  dividends  or other  distributions,  except as provided
herein.


     III.  Voting Rights.  The holders of shares of Series 1998 Preferred  Stock
shall have the following voting rights:

      (a) Each  holder of Series  1998  Preferred  Stock  shall be entitled to a
number of votes equal to the Formula Number then in effect, for each whole share
of Series 1998 Preferred Stock held of record on each matter on which holders of
the Common Stock or shareholders  generally are entitled to vote,  multiplied by
the maximum  number of votes per share  which any holder of the Common  Stock or
shareholders  generally  then have with  respect to such  matter  (assuming  any
holding  period  or other  requirement  to vote a  greater  number  of shares is
satisfied).

      (b)   Except as otherwise provided herein or by applicable law,

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the holders of shares of Series 1998  Preferred  Stock and the holders of shares
of Common  Stock  shall vote  together as one voting  group for the  election of
directors of the  Corporation  and on all other  matters  submitted to a vote of
shareholders of the Corporation.

      (c) If, at the time of any annual meeting of shareholders for the election
of  directors,   the  equivalent  of  two  annual  dividends   (whether  or  not
consecutive)  payable on any share or shares of Series 1998 Preferred  Stock are
in default,  the number of directors  constituting the Board of Directors of the
Corporation  shall be increased by two. In addition to voting  together with the
holders of Common Stock for the election of other directors of the  Corporation,
the holders of record of the Series 1998 Preferred Stock, voting separately as a
voting group to the exclusion of the holders of Common Stock,  shall be entitled
at said  meeting  of  shareholders  (and at each  subsequent  annual  meeting of
shareholders),  unless all  dividends  in arrears have been paid or declared and
set apart for payment prior  thereto,  to vote for the election of two directors
of the  Corporation,  the  holders  of any Series  1998  Preferred  Stock  being
entitled  to cast a number  of votes per whole  share of Series  1998  Preferred
Stock  equal to the  Formula  Number.  Until  the  default  in  payments  of all
dividends that  permitted the election of said  directors  shall cease to exist,
any  director  who shall have been so  elected  pursuant  to the next  preceding
sentence may be removed at any time,  either with or without cause,  only by the
affirmative  vote of the holders of the shares of Series 1998 Preferred Stock at
the time  entitled to cast such  number of votes as are  required by law for the
election of any such  director at a special  meeting of such holders  called for
that purpose,  and any vacancy thereby created may be filled only by the vote of
such holders.  If and when such default shall cease to exist, the holders of the
Series 1998  Preferred  Stock shall be divested of the foregoing  special voting
rights,  subject to  revesting  in the event of each and every  subsequent  like
default in payments of dividends.  Upon the termination of the foregoing special
voting  rights,  the terms of office of all  persons  who may have been  elected
directors  pursuant to said special voting rights shall  forthwith  terminate to
the extent permitted by law, and the number of directors  constituting the Board
of Directors  shall be reduced by two. The voting rights granted by this Section
III(C) shall be in addition to any other voting rights granted to the holders of
the Series 1998 Preferred Stock in this Section III.

      (d) Except as provided herein, in Section XI or by applicable law, holders
of Series 1998  Preferred  Stock shall have no special  voting  rights and their
consent  shall not be required  (except to the extent they are  entitled to vote
with holders of Common Stock as set forth herein) for  authorizing or taking any
corporate action.

IV.   Certain Restrictions.

      (a) Whenever annual dividends or other dividends or distributions  payable
on the Series  1998  Preferred  Stock as  provided in Section II are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares

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of Series 1998 Preferred Stock outstanding shall have been paid in
full, the Corporation shall not

            (i) declare or pay dividends on, make any other  distributions on,
or redeem or purchase or otherwise acquire for consideration any shares of stock
ranking  junior  (either as to dividends  or upon  liquidation,  dissolution  or
winding up) to the Series 1998 Preferred Stock;

            (ii) declare or pay dividends on or make any other distribu tions on
any  shares  of  stock  ranking  on a parity  (either  as to  dividends  or upon
liquidation,  dissolution or winding up) with the Series 1998  Preferred  Stock,
except  dividends paid ratably on the Series 1998  Preferred  Stock and all such
parity stock on which  dividends  are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;

            (iii)  redeem or purchase or otherwise  acquire for  consider  ation
shares  of any  stock  ranking  on a  parity  (either  as to  dividends  or upon
liquidation,  dissolution or winding up) with the Series 1998  Preferred  Stock;
provided  that the  Corporation  may at any time  redeem,  purchase or otherwise
acquire  shares of any such parity  stock in exchange for shares of any stock of
the  Corporation  ranking  junior  (either as to dividends or upon  dissolution,
liquidation or winding up) to the Series 1998 Preferred Stock; or

            (iv) purchase or otherwise  acquire for  consideration any shares of
Series 1998 Preferred Stock, or any shares of stock ranking on a parity with the
Series 1998 Preferred Stock,  except in accordance with a purchase offer made in
writing or by  publication  (as  determined  by the Board of  Directors)  to all
holders  of such  shares  upon  such  terms  as the  Board of  Directors,  after
consideration of the respective  annual dividend rates and other relative rights
and  preferences of the respective  series and classes,  shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.

      (b) The Corporation  shall not permit any subsidiary of the Corporation to
purchase  or  otherwise  acquire  for  consideration  any shares of stock of the
Corporation  unless the Corporation  could,  under paragraph (a) of this Section
IV, purchase or otherwise acquire such shares at such time and in such manner.

     V. Liquidation Rights.  Upon the liquidation,  dissolution or winding up of
the Corporation, whether voluntary or involuntary, no distribution shall be made
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation,  dissolution  or winding  up) to the Series 1998  Preferred  Stock,
unless,  prior  thereto,  the holders of shares of Series 1998 Pre ferred  Stock
shall have  received an amount  equal to the accrued  and unpaid  dividends  and
distributions  thereon,  whether or not  declared,  to the date of such payment,
plus an amount  equal to the  greater  of $.01 per whole  share or an  aggregate
amount per share equal to the Formula Number then in effect times the

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aggregate  amount to be distributed  per share to holders of Common Stock or (b)
to the  holders of stock  ranking on a parity  (either as to  dividends  or upon
liquidation,  dissolution or winding up) with the Series 1998  Preferred  Stock,
except  distributions  made ratably on the Series 1998  Preferred  Stock and all
other such parity stock in  proportion to the total amounts to which the holders
of all such shares are entitled upon such  liquidation,  dissolution  or winding
up.

     VI.  Consolidation,  Merger,  etc. In case the Corporation shall enter into
any consolidation,  merger, share exchange,  combination or other transaction in
which the shares of Common Stock are  exchanged  for or changed into other stock
or  securities,  cash or any other  property,  then, in any such case,  the then
outstanding  shares of Series  1998  Preferred  Stock  shall at the same time be
similarly  exchanged  or  changed  into an amount per whole  share  equal to the
Formula Number then in effect times the aggregate  amount of stock,  securities,
cash or any other property  (payable in kind), as the case may be, into which or
for which each share of Common Stock is exchanged or changed.  In the event both
this Section VI and Section II appear to apply to a transaction, this Section VI
will control.

     VII. No Redemption; No Sinking Fund.

      (a) The  shares of Series  1998  Preferred  Stock  shall not be subject to
redemption  by the  Corporation  or at the option of any  holder of Series  1998
Preferred  Stock;  provided,  however,  that the  Corporation  may  purchase  or
otherwise acquire  outstanding shares of Series 1998 Preferred Stock in the open
market or by offer to any holder or holders of shares of Series  1998  Preferred
Stock.

      (b) The shares of Series 1998  Preferred  Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.

     VIII.  Ranking.  The Series 1998  Preferred  Stock shall rank junior to all
other  series  of  Preferred  Stock  of the  Corporation,  unless  the  Board of
Directors  shall  specifically   determine   otherwise  in  fixing  the  powers,
preferences  and relative,  participating,  optional and other special rights of
the shares of such series and the  qualifications,  limitations and restrictions
thereof.

     IX.  Fractional  Shares.  The Series 1998 Preferred Stock shall be issuable
upon  exercise of the Rights  issued  pursuant to the Rights  Agreement in whole
shares or in any fraction of a share that is one-thousandth (1/1,000) of a share
or any integral  multiple of such fraction  which shall  entitle the holder,  in
proportion to such holder's  fractional shares, to receive divi dends,  exercise
voting rights,  participate in  distributions  and have the benefit of all other
rights of holders of Series 1998 Preferred Stock. In lieu of fractional  shares,
the Corporation, prior to the first issuance of a share or a fraction of a share

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of Series 1998 Preferred Stock, may elect (a) to make a cash payment as provided
in the Rights  Agreement  for  fractions  of a share  other than  one-thousandth
(1/1,000) of a share or any integral multiple thereof or (b) to issue depository
receipts evidencing such authorized fraction of a share of Series 1998 Preferred
Stock  pursuant  to an  appropriate  agreement  between  the  Corporation  and a
depository  selected by the  Corporation;  provided  that such  agreement  shall
provide that the holders of such depository  receipts shall have all the rights,
privileges  and  preferences to which they are entitled as holders of the Series
1998 Preferred Stock.

     X. Reacquired  Shares.  Any shares of Series 1998 Preferred Stock purchased
or  otherwise  acquired by the  Corporation  in any manner  whatsoever  shall be
retired and canceled  promptly after the  acquisition  thereof.  All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock, without par value, of the Corporation, undesignated as to series, and may
thereafter  be  reissued  as part of a new  series  of such  Preferred  Stock as
permitted by law.

     XI. Amendment. None of the powers, preferences and relative, participating,
optional and other special rights of the Series 1998 Preferred Stock as provided
herein or in the Articles of  Incorporation  shall be amended in any manner that
would  alter or change the  powers,  preferences,  rights or  privileges  of the
holders of Series 1998  Preferred  Stock so as to affect such holders  adversely
without  the  affirmative  vote  of  the  holders  of at  least  66-2/3%  of the
outstanding  shares of Series 1998 Preferred Stock,  voting as a separate voting
group;  provided,  however, that no such amendment approved by the holders of at
least 66-2/3% of the outstanding  shares of Series 1998 Preferred Stock shall be
deemed to apply to the powers,  preferences,  rights or privileges of any holder
of shares of Series 1998 Preferred  Stock  originally  issued upon exercise of a
Right after the time of such approval without the approval of such holder.

            THIRD: This amendment was duly adopted by the Board of
Directors of the Corporation without shareholder action on March 19,
1998. Shareholder action was not required.

            IN WITNESS  WHEREOF,  the undersigned has executed these Articles of
Amendment as of this 19th day of March, 1998.

                                   CHURCHILL DOWNS INCORPORATED



                                   By:\s\Thomas H. Meeker
                                      ---------------------

                                   Title: President and Chief Executive Officer




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COMMONWEALTH OF KENTUCKY      )
                              )
COUNTY OF JEFFERSON           )


            The foregoing instrument was acknowledged before me this 19th day of
March,  1998, by Thomas H. Meeker, of CHURCHILL DOWNS  INCORPORATED,  a Kentucky
corporation, on behalf of the corporation.


                                    -----------------------------------
                                    Notary Public

                                    Commission Expires:_________________


THIS INSTRUMENT PREPARED BY:



\s\Robert A. Heath
-------------------
Robert A. Heath
WYATT, TARRANT & COMBS
2800 Citizens Plaza
Louisville, Kentucky  40202
(502) 589-5235






























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