NATURAL DISASTERS

Kentucky Hailstorm

On April 28, 2012, a hailstorm caused damage to portions of Louisville, Kentucky including Churchill Downs Racetrack ("Churchill Downs"), which sustained damage to its stable area and administrative offices, as well as several other structures at the racetrack. The Company carries property and casualty insurance, subject to a $0.5 million deductible. During the three months ended June 30, 2012, the Company filed a preliminary claim for damages with its insurance carrier which remains under review. As of June 30, 2012, the Company has not recorded an impairment of its assets and does not believe this amount will be material. We do not believe that the hailstorm will have a material, adverse impact on the Company's business, financial condition or results of operations.

Mississippi River Flooding

As a result of the Mississippi River flooding, the Company temporarily ceased operations at Harlow’s Casino Resort & Hotel (“Harlow’s”) on May 6, 2011, and the Board of Mississippi Levee Commissioners ordered the closure of the Mainline Mississippi River Levee on May 7, 2011. On May 12, 2011, the property sustained damage to its 2,600-seat entertainment center and a portion of its dining facilities. On June 1, 2011, Harlow’s resumed casino operations with temporary dining facilities. During December 2011, the Company announced a renovation and improvement project which is expected to be completed by early 2013, including a new buffet area, steakhouse, business center, spa facility, fitness center, pool and a multi-purpose event center.

The Company carries flood, property and casualty insurance as well as business interruption insurance subject to a $1.3 million deductible for damages. As of June 30, 2012, the Company has recorded a reduction of property and equipment of $8.5 million and incurred $2.0 million in repair expenditures. During the year ended December 31, 2011, the Company received $3.5 million from its insurance carriers in partial settlement of its claim. This amount has been included as insurance recoveries listed below for the three and six months ended June 30, 2012. In addition, the Company finalized its claim with its insurance carriers and received $12.0 million during the six months ended June 30, 2012. The Company recognized insurance recoveries, net of losses of $5.0 million during the three and six months ended June 30, 2012.

Mississippi Wind Damage

On February 24, 2011, severe storms caused damage to portions of Mississippi, including Greenville, Mississippi, the location of Harlow’s. The Harlow’s property sustained damage to a portion of the hotel, including its roof, furniture and fixtures in approximately 61 hotel rooms and fixtures in other areas of the hotel. The hotel was closed to customers for renovations following the storm damage and reopened during June 2011. The Company carries property and casualty insurance as well as business interruption insurance subject to a $0.1 million deductible for damages. As of June 30, 2012, the Company has recorded a reduction of property and equipment of $1.4 million and incurred $0.4 million in repair expenditures. The Company filed a preliminary claim with its insurance carriers for $1.0 million in damages, which it received during the second quarter of 2011. Approximately $0.4 million of insurance recoveries received were recorded as a reduction of selling, general and administrative expenses against losses related to the interruption of business caused by the wind damage during the year ended December 31, 2011. The Company received an additional $3.4 million from our insurance carriers during the six months ended June 30, 2012. The Company recognized insurance recoveries, net of losses, of $1.5 million during the six months ending June 30, 2012.

The casualty losses and related insurance proceeds have been included as components of operating income in the Company’s Condensed Consolidated Statements of Comprehensive Income. Set forth below is a summary of the impact of the natural disasters on the results of operations of the Company for the three and six months ended June 30, 2012 (in thousands):



	Three Months Ended June 30, 2012								Six Months Ended June 30, 2012
	Casualty Losses		Insurance Recoveries			Insurance Recoveries, Net of Losses			Casualty Losses		Insurance Recoveries			Insurance Recoveries, Net of Losses
Harlow's	$	10,497	$	(15,500	)	$	(5,003	)	$	12,342	$	(18,856	)	$	(6,514	)