8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)     October 14, 2004                                                                               

CHURCHILL DOWNS INCORPORATED

(Exact name of registrant as specified in its charter)

KENTUCKY	0-1469	61-0156015
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

700 Central Avenue Louisville, Kentucky	40208
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code     (502) 636-4400                                                                               

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

        On October 14, 2004, Churchill Downs Incorporated (the “Company”), through its wholly owned subsidiary Churchill Downs Louisiana Horseracing Company, L.L.C. (“CDI Louisiana”), completed its previously announced acquisition of Fair Grounds Race Course in New Orleans, Louisiana, including a thoroughbred race track, 145 acres, support facilities and off-track betting facilities associated with the racetrack, from Fair Grounds Corporation, for $47 million in cash (subject to closing adjustments). The acquisition, pursuant to an asset purchase agreement, as amended, among the Company, CDI Louisiana and Fair Grounds Corporation (the “Fair Grounds Purchase Agreement”), was approved by the United States Bankruptcy Court for the Eastern District of Louisiana pursuant to the amended plan of reorganization of Fair Grounds Corporation in its Chapter 11 bankruptcy case.

        In conjunction with the acquisition of Fair Grounds Race Course, the Company, through CDI Louisiana, also completed the acquisition of certain assets of Finish Line Management Corp. (“Finish Line”) for approximately $6.7 million in cash, pursuant to an agreement among CDI Louisiana, the Company, Finish Line and Bryan G. Krantz (the “Finish Line Agreement”). The Finish Line assets acquired consist primarily of five off-track betting (“OTB”) facilities in the New Orleans area. The Company also agreed to forgive a receivable due from Finish Line to Fair Grounds Corporation and to waive any additional claims of Fair Grounds Corporation against Finish Line which the Company acquired in the acquisition of assets from Fair Grounds Corporation. The Company also entered into a 3 year consulting agreement with Bryan G. Krantz, the President of Fair Grounds Corporation and Finish Line. Under the consulting agreement, Mr. Krantz will be paid compensation of $400,000 per year, plus health insurance and a $300,000 bonus paid at the closing. The Finish Line transaction also included a lease of an OTB from Family Racing Venture, L.L.C., an affiliate of Finish Line and Mr. Krantz.

        Also in conjunction with the Fair Grounds Race Course acquisition, the Company acquired all of the stock of Video Services, Inc., the owner and operator of more than 700 video poker machines in nine locations, including the Fair Grounds Race Course, from Louisiana Ventures, Inc., Steven M. Rittvo, Ralph Capitelli and T. Carey Wicker III (collectively “Sellers”) for approximately $4 million in cash, pursuant to a Stock Purchase Agreement (the “VSI Agreement”) among the Sellers and Churchill Downs Louisiana Video Poker Company, L.L.C., a wholly owned subsidiary of the Company.

        The Fair Grounds Purchase Agreement, the Finish Line Agreement and the VSI Agreement are filed as Exhibits 2.1(a)and 2.1(b), 2.2 and 2.3 to this Current Report on Form 8-K, respectively, and are incorporated by reference herein.

Item 7.01 Regulation FD Disclosure.

        On October 15, 2004, the Company issued a press release announcing the acquisition of Fair Grounds Race Course and related transactions. A copy of this press release is attached hereto as Exhibit 99 .1.

Item 9.01 Financial Statements and Exhibits.

(a)     Financial statements of businesses acquired.

          Financial statements will be filed by amendment not later than 71 calendar days after the date on which this initial report on Form 8-K is required to be filed.

(b)     Pro forma financial information.

          To the extent required by this item, pro forma financial information will be filed by amendment not later than 71 calendar days after the date on which this initial report on Form 8-K is required to be filed.

(c)     Exhibits.

2.1(a) Asset Purchase Agreement dated August 31, 2004 among Churchill Downs Incorporated, on behalf of a wholly owned subsidiary to be formed, Fair Grounds Corporation, a Louisiana corporation and debtor-in-possession, and for the sole purpose of the provisions set forth in §11 of the Asset Purchase Agreement, Churchill Downs Incorporated, a Kentucky corporation, incorporated by reference to Exhibit 2.1 to the Company’s Report on Form 8-K/A filed September 2, 2004.

2.1(b) First Amendment to Asset Purchase Agreement dated as of September 17, 2004 among Churchill Downs Incorporated, on behalf of a wholly owned subsidiary to be formed, Fair Grounds Corporation, a Louisiana corporation and debtor-in-possession, and for the sole purpose of the provisions set forth in Section 5, Churchill Downs Incorporated, a Kentucky corporation, incorporated by reference to Exhibit 2.1 to the Company's Report on Form 8-K filed September 23, 2004.

2.2 Asset Purchase Agreement dated as of October 14, 2004 by and between Churchill Downs Louisiana Horseracing Company, L.L.C., a Louisiana limited liability company, Finish Line Management Corp., a Louisiana corporation, for the sole purpose of the provisions set forth in §12, Churchill Downs Incorporated, a Kentucky corporation, and for the sole purpose of the provisions set forth in § 2(f) and §6(h), Bryan K. Krantz.

2.3 Stock Purchase Agreement by and among Churchill Downs Louisiana Video Poker Company, L.L.C., Steven M. Rittvo, Ralph Capitelli, T. Carey Wicker III and Louisiana Ventures, Inc. dated as of the 14th day of October, 2004.

99.1 Press release dated October 15, 2004 issued by Churchill Downs Incorporated, furnished pursuant to Item 7.01.

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	CHURCHILL DOWNS INCORPORATED
October 20, 2004	/s/ Michael E. Miller                                         Michael E. Miller Executive Vice President and Chief Financial      Officer (Principal Financial and Accounting Officer)

EX-2.2

                                                                   EXHIBIT 2.2

                            ASSET PURCHASE AGREEMENT

          THIS ASSET PURCHASE  AGREEMENT (the  "Agreement")  is made and entered
into as of the 14th day of October,  2004,  by and between (i)  CHURCHILL  DOWNS
LOUISIANA  HORSERACING  COMPANY,  L.L.C., a Louisiana  limited liability company
("Buyer""),   (ii)  FINISH  LINE  MANAGEMENT  CORP.,  a  Louisiana   corporation
("Seller"),  (iii) for the sole  purpose of the  provisions  set forth in ss.12,
CHURCHILL DOWNS INCORPORATED, a Kentucky corporation ("Churchill"), and (iv) for
the sole purpose of the  provisions  set forth in ss.2(f) and ss.6(h),  BRYAN G.
KRANTZ,  an  individual  ("Krantz").  Buyer and  Seller  are each a "Party"  and
collectively, the "Parties."

                                    Recitals

          Seller  manages five  off-track  betting  facilities  for Fair Grounds
Corporation  ("Fair Grounds") located in Kenner,  Gretna,  Houma,  Covington and
Slidell,  Louisiana (collectively,  the "Finish Line OTBs") at which pari-mutuel
wagering and, in some cases,  video poker gaming is conducted and, in connection
therewith, Seller is the owner of certain assets associated with such facilities
and operations (all such businesses and activities as are now being conducted by
the Seller are referred to herein collectively as the "Business").

          Seller  desires to sell to Buyer,  and Buyer  desires to purchase from
Seller,  on the terms and  conditions  set forth in this  Agreement,  the assets
owned by Seller and/or used or useful in the conduct of the Business.

          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
promises hereinafter set forth, and other good and valuable  consideration,  the
Parties agree as follows:

                1. Definitions.

                "ACQUIRED ASSETS" means all of the assets of Seller,  other than
the  Excluded  Assets,  INCLUDING  all of Seller's  (a) Owned Real  Property and
Leased  Real  Property,  (b)  tangible  personal  property  (such as  machinery,
equipment,  inventory,  furniture,  automobiles,  trucks, tractors, trailers and
tools),  (c)  to the  extent  transferable  by  Seller,  Intellectual  Property,
goodwill  associated  therewith,  licenses and sublicenses  granted and obtained
with respect thereto (including any trade names or other  intellectual  property
not owned by Seller but used or useful in the Business),  and rights thereunder,
remedies against  infringements  thereof,  and rights to protection of interests
therein under the laws of all  jurisdictions,  (d) leases,  subleases and rights
thereunder,  (e)  agreements,  contracts,  indentures,  mortgages,  instruments,
Liens, guaranties, other similar arrangements, and rights thereunder, (f) notes,
(g) securities  (excluding the capital stock in Fair Grounds  Corporation),  (h)
Cash (subject to ss.2(d) and ss.6(i)),  (i) Claims,  causes of action, choses in
action, rights of recovery, rights of set off, and rights of recoupment relating
to any  Acquired  Asset,  Assumed  Contract or Assumed  Liability;  (j) accounts
receivable and the proceeds thereof,  (k) to the extent  transferable by Seller,
all   franchises,   approvals,   permits,   licenses,   orders,   registrations,
certificates,  variances,  and similar  rights  obtained  from  governments  and
governmental  agencies,  (l) to the extent  transferable by Seller,  any and all
product service records, equipment and parts lists, operating records, operating
manuals,  safety  manuals and  maintenance  manuals,  engineering  design plans,
blueprints and as-built plans,





specifications,  architectural plans and drawings,  engineering drawings, plats,
environmental   compliance  and  regulatory  information,   creative  materials,
advertising  and  promotional  materials,  studies and reports;  (m) any and all
prepaid  expenses,  retainers,  customer  advances  and  deposits  and  security
deposits of Seller relating to the Business and claims for refunds and rights to
offset  in  respect  thereof,  (n)  Seller's  telephone  and  telecopy  numbers,
websites,  email  addresses and post office boxes,  (o) all insurance  benefits,
including  rights and proceeds,  arising from or relating to the Acquired Assets
or the  Assumed  Liabilities  prior  to the  Closing,  (p) any and all  goodwill
associated  with the Business,  (q) any and all business plans and  projections,
records of sales,  customer lists,  supplier lists and vendor lists, used in (or
for the benefit of) the Business, and (r) at Buyer's expense,  copies of any and
all employee  records,  accounting  records,  accounts,  files,  correspondence,
credit and sales records,  billing records,  customer correspondence relating to
the Business,  all regulatory filings with the Louisiana State Racing Commission
and/or  Louisiana  Gaming  Control  Board (but  excluding  personal  history and
personal  financial  questionnaires  filed by Seller's  officers,  directors and
shareholders)  and other  books and  records  provided  or utilized by Seller in
connection with the operation of the Business.

                "ASSUMED   CONTRACTS"   shall   mean  the   written   contracts,
agreements,  real or personal  property leases,  commitments,  understandings or
instruments  which relate to the  Business or the Acquired  Assets and which are
specifically listed on SCHEDULE 1 attached hereto. Notwithstanding the foregoing
in no event may Assumed  Contracts  include  any  contract,  agreement,  real or
personal  property lease,  commitment,  understanding or instrument  included in
Excluded Assets.

                "ASSUMED  LIABILITIES"  means  only (a)  those  liabilities  and
obligations  of Seller  which  arise  after the  Closing  Date under the Assumed
Contracts,  and (b) those  liabilities  and  obligations  which are set forth on
SCHEDULE 2.

                "BUSINESS" has the meaning set forth in the recitals above.

                "BUSINESS  DAY"  means a day other  than a  Saturday,  Sunday or
other day on which  commercial  banks are  authorized or required to close under
the laws of the United States or the State of Louisiana.

                "BUYER" has the meaning set forth in the preface above.

                "CASH"  means  cash,  cash  equivalents   (including  marketable
securities,   short  term  investments,   uncollected   checks,  bank  accounts,
certificates of deposit and treasury  bills)  calculated in accordance with GAAP
applied  on a basis  consistent  with  the  preparation  of  Seller's  financial
statements.

                "CLAIMS"  means any  action,  cause of  action,  demand,  claim,
Proceeding or investigation.

                "CLOSING" has the meaning set forth in ss.2(f) below.

                "CLOSING DATE" has the meaning set forth in ss.2(f) below.

                                       2




                "CODE" means the Internal Revenue Code of 1986, as amended.

                "DISCLOSURE  LETTER" shall mean that certain  Disclosure  Letter
delivered to Buyer by Seller on or before  September  23,  2004,  the purpose of
which is to disclose  certain  matters  related to this  Agreement  and which is
acceptable to Buyer, in its sole discretion.

                "ENVIRONMENTAL,  HEALTH AND SAFETY REQUIREMENTS" means all Legal
Requirements,  including  but not limited to federal,  state,  local and foreign
statutes,   regulations,  and  ordinances  concerning  health  and  safety,  and
pollution or protection of the  environment,  including  without  limitation all
those  relating  to  the  presence,  use,  production,  generation,  management,
handling, transportation,  treatment, storage, disposal, distribution, labeling,
testing, processing,  discharge,  release, threatened release, control, cleanup,
response to or remediation  of any hazardous  materials,  hazardous  substances,
hazardous  waste,  solid  waste,  petroleum or  petroleum  products,  pollutant,
contaminant or other regulated material or substance.

                "ENVIRONMENTAL,  HEALTH AND SAFETY  LIABILITIES" means any cost,
claims, damages, expense, liability,  obligation or other responsibility arising
from  under  any   Environmental,   Health  and  Safety   Requirements   or  any
Environmental Laws.

                "ENVIRONMENTAL LAWS" has the meaning set forth in ss.3(q) below.

                "ERISA"  means the Employee  Retirement  Income  Security Act of
1974, as amended.

                "EXCLUDED   ASSETS"  means   Seller's  (a)  corporate   charter,
qualifications to conduct business as a foreign  corporation,  arrangements with
registered  agents  relating  to  foreign  qualifications,  taxpayer  and  other
identification  numbers,  seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization, maintenance, and
existence  of Seller as a  corporation,  (b) rights  under this  Agreement,  (c)
non-assignable  Permits  and (d) those  certain  Assets set forth on  SCHEDULE 3
attached hereto.

                "EXCLUDED  LIABILITIES" means all liabilities other than Assumed
Liabilities.

                "GAAP"  means  United  States  generally   accepted   accounting
principles as in effect from time to time.

                "GOVERNMENTAL  ENTITY"  means any federal,  state,  municipal or
local  court,   legislature,   governmental  agency,  commission  or  regulatory
authority or instrumentality.

                "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 and regulations and rules issued pursuant to that Act.

                "INCOME TAX" means any federal,  state, local, or foreign income
tax, including any interest,  penalty, or addition thereto,  whether disputed or
not.

                "INTELLECTUAL PROPERTY" means all ideas and tangible expressions
thereof which belong to Seller  worldwide and includes  without  limitation  all
patents, patentable inventions,

                                       3




trademarks,  trade names,  service marks,  copyrights,  copyrightable  material,
software, trade secrets and franchises.

                "KNOWLEDGE" an individual will be deemed to have  "Knowledge" of
a particular fact or other matter if:

                (a) such  individual  is  actually  aware of such  fact or other
matter; or

                (b) a  prudent  individual  could be  expected  to  discover  or
otherwise  become aware of such fact or other matter in the course of conducting
a reasonably  comprehensive  investigation concerning the existence of such fact
or other matter.

                Seller will be deemed to have  "Knowledge" of a particular  fact
or other matter if any living  individual who is serving,  or who has since 1994
served,  as a director,  president,  vice  president,  secretary or treasurer of
Seller has, or at any time since January 1, 1995 had,  Knowledge of such fact or
other matter.

                "LEASED  REAL  PROPERTY"  means  all of  Seller's  leasehold  or
subleasehold  estates  and other  rights to use or occupy  any land,  buildings,
structures,  improvements, fixtures or other interest in the real property which
are described on SCHEDULE 4 attached hereto.

                "LEGAL  REQUIREMENTS"  shall  mean any  federal,  state,  local,
municipal,  foreign,  international or other administrative order, constitution,
law, ordinance, common law, regulations, statute or treaty.

                "LIENS" means any claim, pledge, option, charge,  hypothecation,
easement,  security  interest,  right-of-way,  encroachment,  mortgage,  deed of
trust,  covenant,  restriction,   reservation,  agreement  of  record  or  other
encumbrance.

                "MULTIEMPLOYER   PLAN"  has  the  meaning  set  forth  in  ERISA
ss.3(37).

                "ORDINARY  COURSE  OF  BUSINESS"  means the  ordinary  course of
business  consistent  with the conduct of Seller's  Business  since December 31,
2003.

                "OWNED  REAL  PROPERTY"  means all of  Seller's  real  property,
together  with all  buildings,  structures,  improvements  and fixtures  located
thereon,   and  all  easements,   servitudes  and  other  rights  and  interests
appurtenant thereto as set forth in Schedule 5 attached hereto.

                "PARTY" and "PARTIES"  have the meaning set forth in the preface
above.

                "PERMITS" shall mean any and all licenses, franchises,  permits,
certificates,  consents or other  authorization  or approval  granted,  given or
otherwise made available by or under the authority of any Governmental Entity or
pursuant to any Legal Requirement.

                "PERMITTED  ENCUMBRANCE"  means: (a) Liens for real estate Taxes
that  are not yet  due or  payable;  (b) any  laws,  regulations  or  ordinances
(including  zoning)  adopted  or  imposed by any  Governmental  Entity;  (c) all
easements,  servitudes,  rights of way, covenants and restrictions, in each case
of record; (d) as to any lease, any Lien encumbering, attaching to or

                                       4





otherwise  affecting  solely the interest of the lessor  thereunder  and not the
interest  of the  lessee  thereunder;  and (e) any liens,  claims,  alienations,
encumbrances  or other  matters  listed  in  schedule  B-2 to any  title  policy
accepted by Buyer at Closing. The Acquired Assets shall only be subject to those
Permitted  Encumbrances  described  in Section (d) of the  Disclosure  Letter as
required by ss.3(d) of this Agreement.

                "PERSON" means an individual, a partnership,  a corporation,  an
association,  a limited  liability  company,  a joint stock company,  a trust, a
joint venture, an unincorporated organization,  or a governmental entity (or any
department, agency, or political subdivision thereof).

                "PROCEEDING"  means any  action,  arbitration,  audit,  hearing,
investigation,  litigation,  or suit (whether civil,  criminal,  administrative,
investigative or informal) commenced, brought, conducted, or heard by or before,
or otherwise involving any Governmental Entity or arbitrator.

                "PURCHASE PRICE" has the meaning set forth in ss.2(c) below.

                "SELLER" has the meaning set forth in the preface above.

                "SUBSIDIARY"  means any entity with respect to which a specified
Person (or a  Subsidiary  thereof)  owns or has the power to vote 50% or more of
the equity  interests in such entity having  general voting power to participate
in the election of the governing body of such entity, including, with respect to
Seller, those entities listed in Section (s) of the Disclosure Letter.

                "TAX" means any federal,  state, local or foreign income,  gross
receipts,  license, payroll,  employment,  excise, severance, stamp, occupation,
premium,  windfall profits,  environmental (including taxes under Code ss. 59A),
custom duties, capital stock, franchise, profits,  withholding,  social security
(or similar),  unemployment,  disability,  real property,  intangible  property,
personal property, sales, use, transfer,  registration, value added, alternative
or add-on  minimum,  estimated,  or other  government  tax or charge of any kind
whatsoever,  including  any  interest,  penalty,  or addition  thereto,  whether
disputed or not.

                "TAX RETURN" means any return,  declaration,  report,  claim for
refund,  or  information  return or statement  relating to Taxes,  including any
schedule or attachment thereto, and including any amendment thereof.

                "THREATENED"  shall mean with  respect  to a claim,  Proceeding,
dispute,  or other matter that a demand or statement has been made (orally or in
writing) or notice has been given  (orally or in writing),  or another event has
occurred  or other  circumstances  exist,  that would  lead a prudent  Person to
conclude that such a claim, Proceeding, dispute, or other matter is likely to be
asserted, commenced, taken or otherwise pursued in the future.

                "TRANSFER  TAXES"  shall have the meaning  specified  in ss.6(e)
below.

                "VSI" means Video Services, Inc., a Louisiana corporation.

                                       5




                "WARN   ACT"  means  the  Worker   Adjustment   and   Retraining
Notification  Act of 1988,  as amended,  and any  successor or similar  state or
local law, and the rules and  regulations  thereunder and under any successor or
similar state or local law.

                2. Basic Transaction.

                     (a)  PURCHASE  AND SALE OF  ASSETS.  On and  subject to the
terms and  conditions of this  Agreement,  Buyer agrees to purchase from Seller,
and Seller agrees to sell, assign, transfer, convey and deliver to Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
ss.2.

                     (b)  ASSUMPTION OF LIABILITIES. On and subject to the terms
and conditions of this Agreement,  Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. Buyer will not assume or have
any responsibility,  however,  with respect to any other obligation or liability
of Seller not included within the definition of Assumed Liabilities.

                     (c)  PURCHASE  PRICE.  Buyer  agrees  to pay to  Seller  an
aggregate amount equal to Two Million Two Hundred Thousand Dollars  ($2,200,000)
plus an  additional  sum of up to Four  Million Five  Hundred  Thousand  Dollars
($4,500,000)  equal to the balance due on Seller's  secured debt  obligations to
First Bank and  Trust,  New  Orleans,  Louisiana  (such  aggregate  amount,  the
"Purchase Price"),  adjusted as contemplated by Section 2(d). The Purchase Price
shall be delivered at Closing via wire transfer of immediately  available  funds
to Seller;  provided,  however, the amount necessary to pay First Bank and Trust
in order to obtain the release of any Liens  affecting any Acquired Assets shall
be paid directly to such bank.

                     (d)  OTHER  CLOSING  ADJUSTMENTS.  Prior to Closing, Seller
shall use its cash only to pay its  liabilities  incurred in the ordinary course
of  business,  other  than any  Claims  owed by Seller  to Krantz or any  person
related directly or indirectly to Krantz. In addition, the following items shall
be prorated  as of the  Closing  Date with  Seller  being  responsible  for that
portion of such  obligations  accruing  through the Closing Date and Buyer being
responsible for the portion of such obligations accruing after the Closing Date.

                          (i) The  Purchase  Price  shall be adjusted at Closing
        for real estate taxes and assessments, which shall be prorated as of the
        Closing Date on the basis of the latest  available  rates and valuations
        furnished  for  the  Owned  Real  Property  by the  taxing  authorities.
        Further,  all water,  sewer and other utility bills that are required by
        the utility operators to be paid current in order to allow Buyer to open
        an account in Buyer's name for such utility  shall be prorated as of the
        Closing Date.

                          (ii)  Seller  shall be  responsible  for the  Transfer
        Taxes.

                          (iii)  Seller shall be  responsible  for the amount of
        obligations or  liabilities  accrued but not yet paid or payable as such
        accrual  relates  to  obligations  or  liabilities  relating  to Assumed
        Contracts  through the Closing Date and Buyer shall be  responsible  for
        the obligations or liabilities relating to Assumed Contracts which arise
        after the Closing Date.

                                       6






                          (iv)  Amounts  payable by Seller  under  subparagraphs
        (i),  (ii) or (iii)  immediately  above may be paid by Seller  from cash
        (prior to the  transfer of cash to Buyer) or from the escrow  account to
        be set up with such cash at or after the  Closing.  To the  extent  that
        cash is not  sufficient  to pay the  amounts  payable  by  Seller  under
        subparagraphs  (i), (ii) or (iii)  immediately  above,  Buyer may deduct
        from the Purchase  Price an amount  sufficient to pay the unpaid amounts
        payable by Seller under  subparagraphs  (i),  (ii) or (iii)  immediately
        above.

                     (e)  THE   CLOSING.   The   closing  of  the   transactions
contemplated by this Agreement (the  "Closing")  shall take place at the offices
of Lemle & Kelleher,  L.L.P.,  601 Poydras  Street,  in New  Orleans,  Louisiana
commencing  at 10:00 a.m.  local time no later than ten (10) days  following the
satisfaction  or waiver of all  conditions to the  obligations of the Parties to
consummate the  transactions  contemplated  hereby (other than  conditions  with
respect to actions the  respective  Parties will take at the Closing  itself) or
such other date as the Parties  may  mutually  determine  (the  "Closing  Date")
PROVIDED,  HOWEVER,  that the  Closing  Date shall be no later than  October 15,
2004.

                     (f)  DELIVERIES AT THE CLOSING. At the Closing,  (i) Seller
will  deliver to Buyer the  various  certificates,  instruments,  and  documents
referred  to in ss.7(a)  below;  (ii) Buyer will  deliver to Seller the  various
certificates,  instruments,  and documents  referred to in ss.7(b) below;  (iii)
Seller will execute, acknowledge (if appropriate), and deliver to Buyer, general
warranty  deeds,  assignments  and such  other  instruments  of sale,  transfer,
conveyance,  and  assignment  as Buyer  and its  counsel  or the  title  company
insuring  title to the Owned Real Property  reasonably  may request;  (iv) Buyer
will execute, acknowledge (if appropriate),  and deliver to Seller an assumption
of Assumed  Contracts and such other instruments of assumption as Seller and its
counsel  reasonably  may  request;  (v) Buyer will deliver to Seller (and pay to
First  Bank and  Trust)  the  consideration  specified  in  ss.2(c)  above to be
delivered  at  Closing,  (vi)  Krantz  will  execute  and  deliver  to Buyer the
Consulting  Agreement in  substantially  the form of EXHIBIT B attached  hereto;
(vii)  Seller and Krantz (for himself and any entities  owned or  controlled  by
him) will  execute and  deliver,  and will cause  Vicki  Krantz,  Family  Racing
Venture, LLC, Gentilly Gaming, LLC, Continental Advertising, Inc., F.G. Staffing
Services,  Inc., Fair Grounds International  Ventures,  L.L.C., James Alexander,
Firal Ryder,  the Chehardy Law Firm and Fair Grounds  Corporation to execute and
deliver,  the Releases in  substantially  the form of EXHIBIT C attached hereto;
(viii) Buyer will  execute and deliver,  and Seller and Krantz will cause Family
Racing Venture,  L.L.C. to execute and deliver,  the Lease in substantially  the
form of EXHIBIT D attached  hereto;  (ix) Buyer will deliver to Seller certified
copies  of  the  Board  of  Directors  of  Buyer  authorizing  the  transactions
contemplated by this  Agreement;  and (x) Seller will deliver to Buyer certified
copies of  resolutions  of the Board of  Directors  and  shareholders  of Seller
authorizing the transactions contemplated by this Agreement.

                     (g)  ALLOCATION OF PURCHASE  PRICE.  Seller and Buyer shall
negotiate in good faith an allocation  of the Purchase  Price among the Acquired
Assets, consistent with the requirements of the Code and any and all regulations
relating thereto. At the Closing,  Buyer and Seller shall agree to an allocation
of the  Purchase  Price  among the  Acquired  Assets  which shall be attached as
EXHIBIT A and shall be binding  upon Buyer and Seller for all  federal and state
income tax purposes such that Buyer and Seller shall each file their federal and
state income tax

                                       7






returns on the basis of such  allocation and neither Buyer nor Seller shall take
a tax position inconsistent with such allocation.

                3.  REPRESENTATIONS AND WARRANTIES OF SELLER.  Seller represents
and warrants to Buyer that the statements contained in this ss.3 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the  Closing  Date (as  though  made then and as though  the  Closing  Date were
substituted for the date of this Agreement  throughout this ss.3), except as set
forth in the  Disclosure  Letter.  The  Disclosure  Letter  will be  arranged in
paragraphs  corresponding to the lettered and numbered  paragraphs  contained in
this ss.3.

                     (a)  ORGANIZATION OF SELLER.  Seller is a corporation  duly
organized,  validly  existing,  and in  good  standing  under  the  laws  of the
jurisdiction of its incorporation.

                     (b) AUTHORIZATION OF TRANSACTION. Seller has full power and
authority  (including full corporate power and authority) to execute and deliver
this  Agreement  and  to  perform  its  obligations  hereunder.  This  Agreement
constitutes  the valid and legally  binding  obligation  of Seller,  enforceable
against it in accordance with its terms and conditions.

                     (c) NONCONTRAVENTION. Except as set forth in Section (c) of
the Disclosure Letter, no filing with, and no permit, authorization,  consent or
approval of, any  Governmental  Entity or other third party is necessary for the
consummation  by  Seller of the  transactions  contemplated  by this  Agreement.
Except  as set  forth in  Section  (c) of the  Disclosure  Letter,  neither  the
execution  and the  delivery  of this  Agreement,  nor the  consummation  of the
transactions  contemplated  hereby  (including the  assignments  and assumptions
referred  to in  ss.2  above),  will  (i)  violate  any  constitution,  statute,
regulation, rule, injunction,  judgment, order, decree, ruling, charge, or other
restriction of any government,  governmental agency, or court to which Seller is
subject or any  provision  of the  charter or bylaws of Seller or (ii)  conflict
with,  result  in a  breach  of,  constitute  a  default  under,  result  in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement,  contract, lease, license,
instrument,  or other  arrangement  to which Seller is a party or by which it is
bound or to which any of its assets is subject (or result in the  imposition  of
any Lien upon any of such assets), except where the violation, conflict, breach,
default, acceleration, termination, modification,  cancellation, failure to give
notice,  or Lien  would not have a  material  adverse  effect  on the  financial
condition  of  Seller  or on  the  ability  of the  Parties  to  consummate  the
transactions contemplated by this Agreement.

                     (d)  TITLE  TO  PROPERTIES;  ENCUMBRANCES;  SUFFICIENCY  OF
ASSETS.

                          (i) As of the Closing,  Seller shall transfer to Buyer
        with full warranty of title and with all other legal warranties (A) good
        and valid record and merchantable  title to the Owned Real Property or a
        good and valid  leasehold  interest in all of the Leased Real  Property,
        free and clear of any and all Liens, claims,  interests and encumbrances
        provided  that the Owned Real  Property and Leased Real  Property may be
        subject to the  Permitted  Encumbrances  described in Section (d) of the
        Disclosure Letter (the "Real Property Permitted Encumbrances"),  and (B)
        good and valid merchantable  title to all of the Acquired Assets,  other
        than the Owned Real Property and Leased Real

                                       8






        Property,  free and clear of any and all Liens,  claims,  interests  and
        encumbrances, (in the case of Leased Real Property, subject to the terms
        and conditions of the leases).

                          (ii)  Except  as  set  forth  in  Section  (d)  of the
        Disclosure Letter, the Acquired Assets (A) constitute all of the assets,
        tangible  and  intangible,  corporeal  and  incorporeal,  of any  nature
        whatsoever,  necessary to operate the  Business in the manner  presently
        operated by Seller,  (B) include all of the  operating  assets of Seller
        related  to  the  Business,  and  (C)  to the  extent  of  the  accounts
        receivable  included therein,  represent valid obligations  arising from
        sales or services  actually  made or performed by Seller in the Ordinary
        Course  of  Business  and as of the  Closing  Date will be  current  and
        collectible subject to no contest,  claim, defense or right of setoff by
        the account debtor thereunder in any material amount.

                          (iii)  Except  as  set  forth  in  Section  (d) of the
        Disclosure  Letter, the Owned Real Property and the Leased Real Property
        are not  subject  to any  rights  of  way,  building  use  restrictions,
        exceptions,  variances, reservations or limitations of any nature except
        (x) minor  imperfections  of title,  if any, none of which detracts from
        the value or impairs the use of the property  subject thereto or impairs
        the operation of Seller, (y) zoning laws and other land use restrictions
        that do not impair the contemplated use of the property subject thereto,
        and (z) the Real Property Permitted Encumbrances.  All buildings, plants
        and  structures  owned by Seller lie wholly within the boundaries of the
        Owned  Real  Property,  have  adequate  access to public  roads  without
        crossing  the  property  of a third party and do not  encroach  upon the
        property of, or  otherwise  conflict  with the  property  rights of, any
        third Person, except for the Real Property Permitted Encumbrances.

                          (iv)  Except  as  set  forth  in  Section  (d)  of the
        Disclosure Letter, the buildings,  plants and structures included in the
        Acquired Assets are structurally  sound and are in reasonable  operating
        condition  and repair for the age of the  respective  asset (normal wear
        and tear excepted) and are adequate for the uses to which they are being
        put and  none of such  buildings,  plants  or  structures  is in need of
        maintenance  or repairs  except for ordinary,  routine  maintenance  and
        repairs; the buildings, plants, structures and equipment included in the
        Acquired  Assets are  sufficient for the conduct of the Business and are
        adequately  served  by  utilities;  and the  equipment  included  in the
        Acquired Assets is in reasonable  operating condition for the age of the
        respective asset, (normal wear and tear excepted).

                     (e)  BOOKS AND  RECORDS.  The  books of  account  and other
financial records,  information and data of Seller related to the Business,  all
of which have been made available to Buyer, are correct in all material respects
and  represent  actual,  bona  fide  transactions  and have been  maintained  in
accordance  with sound  business  practices,  including  the  maintenance  of an
adequate system of internal controls.

                     (f) COMPLIANCE WITH LEGAL REQUIREMENTS; PERMITS.

                          (i)  Except  as set  forth in  Section  (f)(i)  of the
        Disclosure  Letter:  (A)  Seller  is and has been in  compliance  in all
        material respects with each Legal

                                       9







        Requirement  and  Permit  applicable  to it or to  the  conduct  of  the
        Business or the  ownership or use of the Acquired  Assets;  (B) no event
        has  occurred or  circumstance  exists  that (with or without  notice or
        lapse of time) (x) may constitute or result in a violation by Seller of,
        or a failure on the part of Seller to comply with, any Legal Requirement
        or Permit  related to the  Business in any  material  respect or (y) may
        give rise to any  obligation on the part of the Seller to undertake,  or
        to bear all or any  portion of the cost of, any  remedial  action of any
        nature;   and  (C)  Seller  has  not   received   any  notice  or  other
        communication from any Governmental Entity or any other Person regarding
        (x) any actual, alleged,  possible or potential violation of, or failure
        to comply with, in any material respect, any Legal Requirement or Permit
        related  to the  Business,  or (y)  any  actual,  alleged,  possible  or
        potential obligation on the part of Seller to undertake,  or to bear all
        or any portion of the cost of, any remedial action of any nature.

                          (ii)  Section  (f)(ii) of the  Disclosure  Letter sets
        forth all of the material Permits necessary to permit Seller to lawfully
        conduct and operate the Business in the manner it currently conducts and
        operates  the Business and to permit it to own and use its assets in the
        manner in which it currently owns and uses such assets. All such Permits
        are  currently in full force and effect.  All  applications  required to
        have been filed for the renewal of the Permits  listed or required to be
        listed in Section (f)(ii) of the Disclosure  Letter have been duly filed
        on a timely basis with the appropriate  Governmental  Entities,  and all
        other  filings  required to have been made with  respect to such Permits
        have been duly made on a timely basis with the appropriate  Governmental
        Entities.

                     (g) LEGAL  PROCEEDINGS.  Except as disclosed in Section (g)
of  the  Disclosure  Letter,  there  is  no  pending  or to  Seller's  Knowledge
Threatened Proceeding:  (A) that has been commenced by or against Seller related
to the Business or that otherwise relates to or may affect the Business,  or any
of the  assets  owned or used by Seller  related  to the  Business;  or (B) that
challenges,  or may have the effect of preventing,  delaying,  making illegal or
interfering with any of the transactions contemplated by this Agreement.

                     (h)  TAXES.  Except  as  disclosed  in  Section  (h) of the
Disclosure Letter:

                          (i)  Seller  has  filed  all Tax  Returns  that it was
        required to file.  All such Tax Returns were correct and complete in all
        respects.  All  Taxes  owed by Seller  (whether  or not shown on any Tax
        Return) have been paid,  including any Taxes of any other Person owed by
        Seller under Treasury  Regulation  1.1502-6 or any similar  provision of
        state,  local or  foreign  law,  or as a  successor  or  transferee,  by
        contract or otherwise.  Seller  currently is not the  beneficiary of any
        extension of time within which to file any Tax Return. No claim has been
        made by an  authority in a  jurisdiction  where Seller does not file Tax
        Returns that it may be subject to taxation by that  jurisdiction.  There
        are no security  interests  or liens on any of the assets of Seller that
        arose in  connection  with the failure  (or alleged  failure) to pay any
        Tax.

                          (ii) Seller has withheld  and paid all Taxes  required
        to have been withheld and paid in connection  with amounts paid or owing
        to any employee, independent contractor, creditor, stockholder, or other
        third party.


                                       10







                     (i) Employees; Employee Benefit Plans.

                          (i) Section (i)(i) of the Disclosure Letter sets forth
        as of the date  hereof,  a list of all full and part time  employees  of
        Seller  (including  contract  employees  and each  employee  on leave of
        absence or layoff status),  showing (A) name, (B) title,  (C) summary of
        job  description,  (D) date of hire,  (E)  whether  hourly  or  salaried
        employee,  (F) current  salary or wage rate, (G) sick and vacation leave
        that is accrued but unused,  (H) any  obligation or  understanding  with
        such employee to make any  severance or other  payments to such employee
        upon  termination  of his or her employment and (I) a description of any
        employment agreement.

                          (ii) To the Knowledge of Seller, no officer, director,
        agent,  employee,  consultant  or  contractor  of Seller is bound by any
        contract,  agreement or understanding that purports to limit the ability
        of such officer, director, agent, employee, consultant or contractor (A)
        to engage in or  continue or perform any  conduct,  activity,  duties or
        practice  relating to the  Business or (B) to assign to Seller or to any
        other Person any rights to any invention,  improvement, or discovery. To
        the  Knowledge of Seller,  no former or current  employee of Seller is a
        party  to,  or  is  otherwise  bound  by,  any  contract,  agreement  or
        understanding that in any way adversely affected, affects or will affect
        the ability of Seller,  or Buyer to conduct the  Business as  heretofore
        carried on by Seller.

                          (iii)  Section  (i)(iii)  of  the  Disclosure   Letter
        contains a complete and accurate  list of the  following  benefit  plans
        that are  maintained  or  contributed  to by the Seller:  (i)  "employee
        pension  benefit  plans" as defined in Section  3(2) of ERISA  ("Pension
        Plans");  (ii)  "employee  welfare  benefit plans" as defined in Section
        3(1) of  ERISA  ("Welfare  Plans");  and  (iii)  all  other  agreements,
        commitments,  understandings,  policies,  obligations,  arrangements  or
        practices,  whether  written or unwritten,  ("Other Plans") that (A) are
        maintained or contributed to by Seller or any other corporation or trade
        or business  controlled  by,  controlling  or under common  control with
        Seller  (within  the  meaning  of  Section  414 of the  Code or  Section
        4001(a)(14) or 4001(b) of ERISA) (an "ERISA Affiliate"), and (B) provide
        benefits,  or describe policies or procedures  applicable to any current
        or former  director,  officer,  employee,  agent or service  provider of
        Seller or any ERISA  Affiliate,  or the  dependents of any thereof.  The
        Pension   Plans,   Welfare   Plans  and  Other  Plans  are  referred  to
        individually  and  collectively  as the "Benefit  Plans." The Seller has
        delivered to Buyer (1) true, complete and correct copies of each Benefit
        Plan (or,  in the case of any  unwritten  Benefit  Plan,  a  description
        thereof), (2) the most recent annual report on Form 5500 with respect to
        each Benefit Plan, if any such report was required,  (3) the most recent
        summary  plan  description  for each Benefit Plan for which such summary
        plan description is required. Except as set forth in Section (i)(iii) of
        the Disclosure Letter the consummation of the transactions  contemplated
        by this Agreement will not result in the vesting of, acceleration of, or
        obligation to pay, any benefit.

                          (iv)  Except as set forth in  Section  (i)(iv)  of the
        Disclosure  Letter,  (A) each Pension Plan that purports to satisfy Code
        Section  401(a) is  qualified in form and  operation  under Code Section
        401(a), and each trust relating to each such Pension Plan is exempt from
        federal income tax under Code Section 501(a), (B) neither

                                       11






        Seller nor any ERISA Affiliate sponsors,  contributes to, or is required
        to contribute  to a defined  benefit plan as defined in Section 3(35) of
        ERISA  or  to  a   Multiemployer   Plan,  (C)  there  are  no  facts  or
        circumstances  concerning  the  Benefit  Plans that may give rise to any
        liability of Seller,  or Buyer under Title IV of ERISA, (D) no event has
        occurred or  circumstance  exists that presents a risk of the occurrence
        of  any  withdrawal  from,  or  the  termination,   reorganization,   or
        insolvency of, any Multiemployer Plan that could result in any liability
        of Seller to a  Multiemployer  Plan,  and (E) no Employee  Benefit  Plan
        provides   retiree   health   benefits  other  than  group  health  plan
        continuation coverage under Part 6 of Title I of ERISA and Section 4980B
        of the Code.

                          (v) No transaction prohibited by ERISA Section 406 and
        no  "prohibited  transaction"  under  Section  4975(c)  of the  Code has
        occurred with respect to any Pension Plan.  Seller is in compliance with
        the continuation  coverage  provisions of Part 6 of Title I of ERISA and
        Section 4980B of the Code.

                          (vi)  The  Benefit  Plans  are  in  compliance  in all
        respects with the applicable provisions of ERISA, the Code and all other
        Legal  Requirements.  All reports,  returns,  notices,  descriptions and
        similar  documents  with respect to the Benefit Plans required by ERISA,
        the Code or other  applicable  Legal  Requirements  to be filed with any
        Governmental  Entity or distributed  to any Benefit Plan  participant or
        beneficiary have been duly and timely filed or distributed. There are no
        investigations by any Governmental Entity or other claims (except claims
        for benefits payable in the normal  operation of the Benefit Plans),  or
        suits or proceedings against or involving any Benefit Plan.

                     (j) LABOR DISPUTES; COMPLIANCE.

                          (i) Seller has complied in all material  respects with
        all Legal  Requirements  relating  to  employment  practices,  terms and
        conditions    of    employment,     equal    employment     opportunity,
        nondiscrimination,   immigration,  wages,  hours,  benefits,  collective
        bargaining and other  requirements,  the payment of social  security and
        similar taxes and occupational  safety and health.  Seller is not liable
        for the payment of any taxes, fines, penalties or other amounts, however
        designated,  for  failure  to comply  with,  or a breach  of, any of the
        foregoing Legal Requirements.

                          (ii)  Except as  provided  in  Section  (j)(ii) of the
        Disclosure  Letter,  Seller has not been, and is not now, a party to any
        collective  bargaining  agreement  or other  labor  contract,  and since
        January 1, 2004, there has not been,  there is not presently  pending or
        existing, and to Seller's Knowledge there is not Threatened, any strike,
        slowdown,   picketing,  work  stoppage  or  employee  grievance  process
        involving  Seller.  No event has  occurred or  circumstance  exists that
        could  provide the basis for any work  stoppage or other labor  dispute,
        and there is not pending or, to Seller's  Knowledge,  Threatened against
        or affecting Seller any Proceeding  relating to the alleged violation of
        any  Legal  Requirement  pertaining  to labor  relations  or  employment
        matters, including any charge or complaint filed with the National Labor
        Relations  Board,  the Equal  Employment  Opportunity  Commission or any
        other Governmental  Entity,  and there is no organizational  activity or
        other labor dispute against or affecting Seller or its facilities.


                                       12






                     (k) Intellectual Property Rights.

                          (i) Section (k)(i) of the Disclosure Letter contains a
        complete and accurate list, to the extent possible,  of all Intellectual
        Property  Rights of Seller,  and Seller has delivered to Buyer  accurate
        and  complete   copies  of  all  contracts,   agreements,   licenses  or
        understandings  relating to the Intellectual Property Rights, except for
        any  license  implied by the sale of a product  and  perpetual,  paid-up
        licenses for commonly  available  Software programs with a value of less
        than  $1,000 per unit or license  under  which  Seller is the  licensee.
        There are no  outstanding  and, to  Seller's  Knowledge,  no  Threatened
        Proceedings,   disputes  or  disagreements  with  respect  to  any  such
        contract, agreement, license or understanding.

                          (ii)  Except as set forth in  Section  (k)(ii)  of the
        Disclosure  Letter,  the Intellectual  Property Rights listed in Section
        (k)(i)  of the  Disclosure  Letter  are  all  those  necessary  for  the
        operation  of  the  Business  as it is  currently  conducted,  provided,
        however,  Seller does not represent that the foregoing are adaptable for
        use by Buyer in the  Business.  Seller is the owner or  licensee  of all
        right,  title and interest in and to each of such Intellectual  Property
        Rights, free and clear of any and all Liens and Encumbrances, and it has
        the  right  to  use  without  payment  to a  third  party  all  of  such
        Intellectual  Property Rights,  other than in respect of licenses listed
        in Section (k)(ii) of the Disclosure Letter.

                     (l) CONTRACTS; NO DEFAULTS.

                          (i) Section (l)(i) of the Disclosure  Letter  contains
        an accurate and complete list  (including  the parties to the contracts,
        agreements  or  understandings),  and  Seller  has  delivered  to  Buyer
        accurate and complete  copies,  of all  contracts,  agreements,  leases,
        licenses,  understandings and arrangements related to the Business, each
        written warranty, guaranty and/or other similar undertaking with respect
        to  contractual  performance  by Seller related to the Business and each
        amendment,  supplement  and  modification  (whether  oral or written) in
        respect of any of the foregoing.

                          (ii)  Except as set forth in  Section  (l)(ii)  of the
        Disclosure   Letter,   each   contract,   agreement,   lease,   license,
        understanding  and  arrangement  to which  Seller  is a party is in full
        force and effect and is valid and  enforceable  in  accordance  with its
        terms;  and to the  Knowledge  of Seller,  will not upon  completion  or
        performance  thereof have a material  adverse  affect on the Business or
        the assets or the  business to be  conducted  by Buyer with the Acquired
        Assets.

                          (iii)  Except as set forth in Section  (l)(iii) of the
        Disclosure  Letter, (A) Seller and to the Knowledge of Seller each other
        Person that has or had any  obligation or liability  under any contract,
        agreement, lease, license, understanding and arrangement to which Seller
        is a party, is and has been in compliance in all material  respects with
        all  applicable  terms  and  requirements   thereof  and  there  are  no
        renegotiations,   attempts  to  renegotiate  or  outstanding  rights  to
        renegotiate  any of the same; (B) no event has occurred or  circumstance
        exists  that (with or without  notice or lapse of time) may  contravene,
        conflict with or result in a breach of, or give Seller or

                                       13






        other  Person  the right to  declare a default  or  exercise  any remedy
        under,  or to  accelerate  the  maturity or  performance  of, or payment
        under, or to cancel,  terminate or modify, any of the same; (C) no event
        has  occurred or  circumstance  exists  under or by virtue of any of the
        same that  (with or  without  notice or lapse of time)  would  cause the
        creation of any Liens  affecting  any of the  Acquired  Assets;  and (D)
        Seller has not given to or received  from any other Person any notice or
        other  communication  (whether  oral or written)  regarding  any actual,
        alleged, possible or potential violation or breach of, or default under,
        any  such  contract,   agreement,  lease,  license,   understanding  and
        arrangement.

                     (m) INSURANCE.

                          (i) Section  (m) of the  Disclosure  Letter  lists all
        insurance  policies of Seller  relating to the  Business,  the  Acquired
        Assets and  employees  of Seller  engaged in the  Business  prior to the
        Closing  Date.  All such  insurance  policies  (A) are  outstanding  and
        enforceable,  (B)  are  issued  by one or  more  financially  sound  and
        reputable  insurers,  (C) taken  together,  provide  adequate  insurance
        coverage for the Acquired  Assets,  the Business and the  operations  of
        Seller until the Closing Date,  and (D) are  sufficient  for  compliance
        with all Legal Requirements and any contract, agreement, lease, license,
        understanding  and arrangement  included in the Acquired Assets to which
        Seller is a party.  Except as set forth in Section (m) of the Disclosure
        Letter,  Seller has paid all premiums due, and has  otherwise  performed
        all of their  obligations,  under each such insurance policy, and Seller
        has given  notice to the  applicable  insurer of all claims  that may be
        insured thereby.

                          (ii)  Seller  has  not  received  (A) any  refusal  of
        coverage or any notice that a defense will be afforded with  reservation
        of rights,  or (B) any notice of  cancellation  or any other  indication
        that any  policy of  insurance  is no longer in full  force or effect or
        that the issuer of any  policy of  insurance  is not  willing or able to
        perform its obligations thereunder.

                     (n)  RELATED  PARTY  TRANSACTIONS.  Except  as set forth in
Section (n) of the  Disclosure  Letter,  to  Seller's  Knowledge,  no  employee,
director  or  officer  of Seller or any  shareholder  of Seller or member of the
immediate  family  of any of the  same  has any  direct  or  indirect  ownership
interest in any firm or  corporation  with which  Seller is  affiliated  or with
which  Seller  has a  business  relationship,  or any firm or  corporation  that
competes with Seller, except that employees, officers or directors of Seller and
shareholders of Seller and members of their immediate  families may own stock in
publicly traded  companies that may compete with Seller.  Except as set forth in
Section (n) of the Disclosure  Letter,  no member of the immediate family of any
officer or  director  of Seller or of a  shareholder  of Seller is  directly  or
indirectly interested in any contract, agreement, lease, license,  understanding
and arrangement to which Seller is a party.

                     (o)  FINANCIAL  STATEMENTS.  Seller has delivered to Buyer:
(i) an audited balance sheet of Seller at and as of December 31, 2003, including
the notes  thereto,  and the related  audited  statements of income,  changes in
shareholders' equity and cash flows for the fiscal year then ended, including in
each case the notes  thereto,  and (ii) an unaudited  balance sheet of Seller at
and as of June 30, 2004 and the related unaudited statements of income,

                                       14






changes in  shareholders'  equity,  and cash  flows for the six (6) months  then
ended,  including  in the case of the  audited  financial  statements  the notes
thereto as qualified by the Report of the Independent Auditor contained therein.
Such  financial  statements  (the  "Financial  Statements")  fairly  present the
financial  condition  and the results of  operations,  changes in  shareholders'
equity  and cash  flows of  Seller  in all  material  respects  at and as of the
respective dates and for the periods  referred to in such Financial  Statements,
all in accordance with GAAP,  except with respect to the unaudited balance sheet
and unaudited  statements of income,  changes in shareholders'  equity, and cash
flows,  the absence of  footnotes  and normal  recurring  year-end  adjustments.
Further,  Seller shall deliver to Buyer all monthly operating statements for the
Business from the date of this  Agreement  through and until the Closing.  Since
June 30, 2004,  there has not been any material  adverse change in the Business,
prospects,  operations,  properties,  assets or condition of Seller,  other than
ordinary seasonal variations in the Business.

                     (p) ABSENCE OF  UNDISCLOSED  LIABILITIES.  Except as and to
the extent reflected or specifically  reserved against on the unaudited  balance
sheet of Seller at and as of June 30, 2004 or as set forth in Section (p) of the
Disclosure  Letter,  Seller has no liabilities or obligations  (whether accrued,
absolute,  contingent,  unliquidated or otherwise, whether due or to become due,
whether  known or  unknown,  and  regardless  of when  asserted)  arising out of
transactions or events  heretofore  entered into, or any action or inaction,  or
state of facts  existing,  with respect to or based upon  transactions or events
heretofore  occurring,  except liabilities which have arisen after June 30, 2004
in the Ordinary  Course of Business  (none of which is a liability for breach of
contract,   breach  of  warranty,   violation  of  Legal   Requirements,   tort,
infringement, claim or lawsuit).

                     (q) ENVIRONMENTAL  MATTERS.  Except as set forth in Section
(q) of the  Disclosure  Letter,  (i) Seller and the Owned  Properties and Leased
Properties  are in  compliance  with  all  environmental  Permits  and  with all
Environmental,  Health and  Safety  Requirements  and with all other  applicable
federal,  state  and local  laws and  regulations  in effect on the date  hereof
relating to  pollution  or the  environment,  including,  but not limited to the
Comprehensive Environmental Response,  Compensation and Liability Act, 42 U.S.C.
9601, et seq.,  the Resource  Conservation  and Recovery Act, 42 U.S.C.  6901 et
seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42
U.S.C.  Section  7401 et seq.,  and all other laws and  regulations  relating to
emissions,  spills,  leaks,  discharges,  releases or threatened releases of any
"hazardous  substance,"  "solid waste" or "hazardous waste," as defined therein,
as well as relating to any other  regulated  substance or  material,  pollutant,
contaminant,  petroleum and petroleum  products,  natural gas or synthetic  gas,
special nuclear or by-product  material,  as defined by the Atomic Energy Act of
1954, 42 U.S.C.  Section 3011 et seq., and the regulations  promulgated  thereto
and  "hazardous  chemicals",  as  defined  in 29 C.F.R.  Part 1910 or  otherwise
relating to the manufacture,  possession, distribution, use, treatment, storage,
disposal,  transport  or handling of such  material  (such laws and  regulations
being hereinafter referred to as "Environmental  Laws"); and (ii) Seller has not
been charged with, convicted of, or to Seller's Knowledge,  investigated for any
violation,  or is in violation  of any  Environmental  Laws by any  Governmental
Entity  with  respect  to the  Acquired  Assets  or the  Business.  There are no
Environmental,  Health and Safety  Liabilities  and no  environmental  condition
exists on any portion of the Acquired  Assets that would likely give rise to any
Environmental,  Health and Safety Liabilities or a material claim that Seller is
in violation of any Environmental Laws.

                                       15








                     (r) [reserved]

                     (s)  SUBSIDIARIES.  Seller  does  not  have  any  ownership
interest in any other  corporation,  partnership,  joint venture or other entity
except the  ownership of common stock of Fair Grounds  Corporation.  Seller does
not  control  directly  or  indirectly  nor have any direct or  indirect  equity
participation  in  any  corporation,   partnership,  trust,  or  other  business
association  other  than  Fair  Grounds  Corporation;  provided,  however,  this
representation  shall not apply to any other legal entity  owned by Krantz.  The
Parties  acknowledge that all  representations and warranties as to Fair Grounds
Corporation  and/or  any  Subsidiaries  of Fair  Grounds  Corporation  have been
separately  addressed in that certain  asset  purchase  agreement by and between
Churchill  and Fair Grounds  Corporation,  dated as of August 31,  2004,  and as
subsequently  amended,  and that no  representations  and warranties are made by
Seller as to Fair Grounds  Corporation  and/or any  Subsidiaries of Fair Grounds
Corporation, except as set forth in the first two sentences of this ss.3(s).

                     (t) [reserved]

                     (u) DISCLOSURE.  No representation or warranty of Seller in
this Agreement and no statement contained in any certificate or other instrument
furnished  or to be furnished  to Buyer  hereunder  contains or will contain any
untrue  statement  of material  fact or omits or will omit to state any material
fact  necessary  to make  the  statements  herein  or  therein,  in light of the
circumstances  in which they were made, not misleading.  Promptly after becoming
aware of the same,  Seller shall supplement or amend the Disclosure  Letter with
respect to any matter arising after the effective date of the Disclosure  Letter
which,  if  existing,  occurring  or  known by it at the  effective  date of the
Disclosure  Letter would have been  required to be set forth or described in the
Disclosure Letter and shall provide prompt written notice to Buyer regarding the
same. In the event Seller makes such a supplemental  disclosure,  Buyer shall be
entitled to review the facts pertaining thereto and may terminate this Agreement
by so  notifying  Seller  within ten (10)  Business  Days after  receipt of such
supplemental disclosure.

                4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller that the  statements  contained  in this ss.4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the  Closing  Date (as  though  made then and as though  the  Closing  Date were
substituted for the date of this Agreement throughout this ss.4).

                     (a)  ORGANIZATION  OF BUYER.  Buyer is a limited  liability
company,  validly existing,  and in good standing under the laws of the State of
Louisiana.

                     (b) AUTHORIZATION OF TRANSACTION.  Buyer has full corporate
power and  authority  to execute and deliver this  Agreement  and to perform its
obligations hereunder.  This Agreement constitutes the valid and legally binding
obligation of Buyer, enforceable in accordance with its terms and conditions.

                     (c)  NONCONTRAVENTION.  No  filing  with,  and  no  permit,
authorization,  consent or approval of, any Governmental Entity is necessary for
the  consummation by Buyer of the  transactions  contemplated by this Agreement.
Except  as shall be cured or  resolved  by,  or not  exist as of,  the  Closing,
neither the execution and the delivery of this Agreement, nor the

                                       16





consummation of the  transactions  contemplated  hereby by Buyer  (including the
assignments  and  assumptions  referred to in ss.2 above),  will (i) violate any
constitution,  statute, regulation,  rule, injunction,  judgment, order, decree,
ruling, charge, or other restriction of any government,  governmental agency, or
court to which Buyer or Churchill is subject or any  provision of its charter or
bylaws or (ii) conflict with, result in a breach of, constitute a default under,
result in the  acceleration  of,  create  in any party the right to  accelerate,
terminate,  modify,  or cancel,  or  require  any  notice  under any  agreement,
contract,  lease, license,  instrument, or other arrangement to which Buyer is a
party or by which it is bound or to which any of its assets is subject.

                     (d) BUYER'S  FINANCIAL  STANDING.  Buyer has the  financial
resources  necessary  to  consummate  the  transactions   contemplated  by  this
Agreement.

                5.  PRE-CLOSING  COVENANTS.  The Parties  agree as follows  with
respect to the period between the date hereof and the Closing.

                     (a) GENERAL.  Each of the Parties  will use its  reasonable
best  efforts  to take all action  and to do all  things  necessary  in order to
consummate and make effective the  transactions  contemplated  by this Agreement
(including satisfaction,  but not waiver, of the closing conditions set forth in
ss.7 below).

                     (b) NOTICES  AND  CONSENTS.  Each of the Parties  will (and
Buyer will cause  Churchill to) give any notices to, make any filings with,  and
use its  reasonable  best efforts to obtain any  authorizations,  consents,  and
approvals  of  governments  and  governmental  agencies in  connection  with the
matters referred to in ss.3(c) and ss.4(c) above.

                     (c)  OPERATION OF BUSINESS.  Seller shall not engage in any
practice,  take any action,  or enter into any transaction  outside the Ordinary
Course of Business or as required to perform the  obligations  set forth in this
Agreement.  Seller shall from the date hereof through and until the Closing, use
commercially  reasonable  efforts to maintain and preserve the condition,  value
and  goodwill of the Business  and the  Acquired  Assets.  Prior to the Closing,
Seller shall use its cash only to pay its  liabilities  incurred in the ordinary
course of business, other than any Claims owed by Seller to Krantz or any person
related directly or indirectly to Krantz.

                     (d) FULL ACCESS. Seller will (i) permit  representatives of
Buyer to have full access at all reasonable  times, and in a manner so as not to
interfere with the normal business  operations of Seller, to the Acquired Assets
and all books, records (including tax records),  contracts,  and documents of or
pertaining to Seller. Seller will promptly furnish Buyer with such financial and
operating  data and other  information  with  respect  to the  Business  and the
Acquired Assets as Buyer may from time to time reasonably request.  For purposes
of  this  Agreement,  Buyer  will  treat  and  hold  as  such  any  confidential
information it receives from Seller in the course of the reviews contemplated by
this ss.5(d)  (except any disclosure  required by law or order of court or other
governmental agency, or the rules and regulations of the Securities and Exchange
Commission  or the Nasdaq Stock  Market),  will not use any of the  confidential
information except in connection with this Agreement,  and, if this Agreement is
terminated  for any  reason  whatsoever,  will  return  to Seller  all  tangible
embodiments (and all copies) of the

                                       17





confidential  information which are in its possession.  Notwithstanding anything
to the  contrary  contained in this  Section  5(d),  in no event shall Seller be
required to provide (i) materials  that would result in a waiver of the attorney
client  privilege  with respect to any  Proceedings  to which Seller is a party,
(ii)  any  attorney  work  product,  or (iii)  materials  that  are  subject  to
confidentiality  agreements  with third  parties  unless Buyer first obtains the
consent of such third parties to the disclosure of said materials.

                     (e) NOTICE OF  DEVELOPMENTS.  Each  Party will give  prompt
written notice to the other Party of any material adverse  development causing a
breach of any of its own  representations  and warranties.  No disclosure by any
Party pursuant to this ss.5(e),  however, shall be deemed to amend or supplement
the Disclosure Letter or to prevent or cure any  misrepresentation  or breach of
warranty except as provided in ss.3(u).

                     (f) MATTERS RELATED TO THE CONDUCT OF BUSINESS. Seller will
not sell,  assign,  mortgage or encumber any of the Acquired  Assets,  incur any
indebtedness, or enter into executory contracts or leases of real property or of
personal property other than in the Ordinary Course of Business.

                6. ADDITIONAL COVENANTS.

                     (a)  EMPLOYEES.  Buyer  agrees that prior to the Closing it
shall offer jobs to a sufficient number of current full-time employees of Seller
so as not to trigger  any WARN Act  liabilities  in  respect of Seller.  Nothing
herein  shall  obligate  Buyer  to  employ  any of  Seller's  employees  for any
particular length of time following the Closing.  Seller shall,  effective as of
the Closing, terminate all of its employees.

                     (b) FURTHER ASSURANCES. Subject to the terms and conditions
of this  Agreement,  each of the  parties  hereto  shall (and Buyer  shall cause
Churchill to) use commercially reasonable efforts to take, or cause to be taken,
all action,  and to do, or cause to be done,  all things  reasonably  necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective  the sale of the Acquired  Assets in accordance  with this  Agreement,
including using commercially reasonable efforts to ensure timely satisfaction of
the conditions precedent to each party's obligations hereunder.  Neither Seller,
on the one hand, nor Buyer, on the other hand, shall,  without the prior written
consent of the other party,  take any action which would  reasonably be expected
to  prevent  or  materially  impede,  interfere  with or delay the  transactions
contemplated by this Agreement.  From time to time on or after the Closing Date,
Seller shall, at its own expense, execute and deliver such documents to Buyer as
Buyer may reasonably request in order to more effectively vest in Buyer Seller's
title to the Acquired  Assets.  From time to time after the date  hereof,  Buyer
shall,  at its own  expense,  execute and deliver  such  documents  to Seller as
Seller may reasonably  request in order to more effectively  consummate the sale
of the  Acquired  Assets  and  the  assumption  and  assignment  of the  Assumed
Liabilities and the Assumed Contracts in accordance with this Agreement. Neither
the foregoing nor any other  provision of this Agreement shall in any way impact
or alter,  or impose any standard of review upon,  or be deemed to do any of the
same, with respect to any  determination  or decision to be made by Buyer in its
sole  discretion with respect to the conditions set forth in Section 7(a) hereof
as expressly set forth therein.

                                       18





                     (c) TRANSFER TAXES. All excise, sales, use, transfer, value
added,  registration,  stamp,  recording,  documentary,  conveyance,  franchise,
transfer,  gains and similar taxes,  levies,  charges and recording,  filing and
other fees  (collectively,  "Transfer  Taxes")  incurred in connection  with the
transactions  contemplated by this  Agreement,  if any, shall be paid by Seller.
Seller shall, at its own expense,  timely pay and file all necessary tax returns
and other documentation with respect to all such Transfer Taxes and, if required
by  applicable  law,  Buyer shall join in the  execution  of any tax returns and
other documentation at Seller's request.

                     (d) NAME CHANGE.  Seller agrees that at the Closing,  or as
soon as practicable  thereafter (but in no event later than one (1) Business Day
after  the  Closing  Date),  Seller  will  change  its name and will not use the
corporate  names  "Finish  Line" or "Finish Line  Management  Corp." or any name
similar thereto in any business activity.

                     (e) DUE DILIGENCE RESPONSES.  Seller shall promptly respond
in writing to the due diligence  requests or inquiries  made in writing by Buyer
or its representatives.

                     (f) BUSINESS MONITORING. On and after the date hereof until
the Closing,  Seller shall permit Buyer to have not more than four (4) executive
personnel on site at the Owned Real  Property (in suitable  office  space) or at
the Leased Real Property. Such executive personnel shall be permitted to inspect
the premises and monitor its  operations  and the  operations of the Business to
assure that the Business is being  operated in the Ordinary  Course of Business.
Seller  shall  cooperate  in good faith  with Buyer and use its best  efforts to
prevent the occurrence of any acts outside the Ordinary Course of Business which
could be adverse to Buyer's operation of the Business after the Closing.

                     (g) RECEIVABLE AND CLAIMS.  Upon acquiring the  receivables
owed by Seller to Fair  Grounds  Corporation,  Buyer  agrees to  forgive up to a
maximum  amount of $4,500,000 of such  receivables.  Upon acquiring any claim by
Seller against Fair Grounds Corporation,  Buyer shall and hereby waives any such
claim against Fair Grounds  Corporation.  Upon acquiring any other claim by Fair
Grounds Corporation against Seller, Buyer shall and hereby waives any such claim
against Seller.

                     (h)  COVENANT NOT TO COMPETE.  For any reason,  without the
express written approval of Buyer,  Seller and Krantz shall not, during the term
of the Consulting Agreement attached as EXHIBIT B hereto (the "Term"), and for a
period of one (1) year after the  expiration of the Term,  carry on or engage in
the business of  conducting  live horse  racing  meets and to accept  parimutuel
wagers thereon at the race track commonly known as Fair Grounds Race Course (the
"Racetrack"),  operate  slot  machines at the  Racetrack  and accept  parimutuel
wagers and operate video lottery poker at the off-track wagering  facilities and
any business  ancillary to the  foregoing  operations  in Louisiana  parishes of
Orleans,  Jefferson,  Lafourche, St. Bernard, St. Charles, St. John the Baptist,
St. Tammany,  and  Terrebonne.  Pursuant to this  obligation,  Seller and Krantz
shall not directly or indirectly own, operate, manage, control or participate in
the ownership,  management,  operation or control, or be paid or employed by, or
otherwise  become  associated  with,  affiliated with or provide  assistance to,
whether as an employee, consultant,  independent contractor,  director, officer,
shareholder,  partner,  agent,  associate,  principal,  representative or in any
other capacity,  any business  entity that directly or indirectly  competes with
Buyer or Churchill; provided, however, that Krantz: (1) may invest in

                                       19





stocks,  bonds,  or other  securities  of any  corporation  or other entity (but
without  participating in the business thereof) if such stocks,  bonds, or other
securities  are listed for trading on a national  stock  exchange  and  Krantz's
investment  does not exceed 5% of the issued and  outstanding  shares of capital
stock,  or in the  case  of  bonds  or  other  securities,  5% of the  aggregate
principal  amount  thereof  issued and  outstanding;  (2) shall be  permitted to
directly or indirectly (i) own, operate, manage, control, develop or participate
in the ownership,  management,  operation,  control,  or development of a hotel,
restaurants  and bars (with gaming as allowed  under the law currently in effect
in  Louisiana)  and (ii) pursue the potential  relocation of the Treasure  Chest
riverboat casino owned by Boyd Gaming Corporation or the potential relocation of
another existing riverboat casino (and collect rents therefrom howsoever based),
but, with respect to both (i) and (ii), only at and to property  currently owned
directly  or  indirectly,  in  whole  or in part by  Krantz  (collectively,  the
"Gabriel  Entities") and commonly  known as the Gabriel real estate  development
(the  "Gabriel  Development")  (provided,  however,  that no  off-track  betting
facility  (as  defined by  statute)  or truck stop may be located on the Gabriel
Development  during the period of time  contemplated by this Section 6(h));  and
(3) shall be  permitted  to  operate  and/or  manage  third  party  video  poker
facilities  which are  located a minimum  of two (2) miles from any OTB owned by
Buyer or Churchill.  For purposes hereof,  the term "Gabriel  Development" shall
mean the property which is generally  bounded on the west by apartments,  on the
south by Joe Yenni  Boulevard,  on the east by the Duncan Street  drainage canal
and the property of the 4th Jefferson Drainage District, and on the north by the
farthest extent of the shoreline,  riparian and/or  waterbottom  rights to which
the Gabriel  Entities are or may be entitled and shall  include all riparian and
waterbottom rights as now or hereafter may exist.

                     If the agreements set forth in this ss.6(h) would otherwise
be  determined  to  be  invalid  or   unenforceable  by  a  court  of  competent
jurisdiction,  the parties  intend and agree that such court shall  exercise its
discretion in reforming such  agreements to the end that Seller and Krantz shall
be subject to a covenant not to compete with Buyer which is reasonable under the
circumstances  and enforceable by Buyer. It is agreed that no adequate remedy at
law exists for Buyer for violation of such agreements,  and these agreements may
be  enforced  by  any  equitable  remedy,  including  specific  performance  and
injunction, without limiting the right of Buyer to proceed at law to obtain such
relief as may be available to it.

                     (i) APPLICATION OF CASH. From and after the Closing, Seller
shall deposit any cash on hand of Seller in an escrow account  approved by Buyer
to be used to pay the  pre-Closing  ordinary  trade  expenses of Seller with the
balance of such  account,  if any,  paid to Buyer within  ninety (90) days after
Closing.

                     (j) As of the Closing,  Seller's  Board of Directors  shall
have adopted a resolution  providing for (i)  termination of Selle's 401k Profit
Sharing Plan (the "Plan") effective as of the Closing Date; (ii) authorizing and
directing  Seller's officers to implement the termination,  including filing, as
soon as  administratively  feasible,  an application  with the Internal  Revenue
Service for a  determination  that  termination  of the Plan does not  adversely
affect the Plan's qualification for federal tax purposes; and (iii) amendment of
applicable  Plan documents to provide that transfer of employment to Buyer shall
not be  treated  as an event of  default  under any loan from the Plan to a Plan
participant.

                                       20





                7. CONDITIONS TO OBLIGATION TO CLOSE.

                     (a)  CONDITIONS TO OBLIGATION OF BUYER.  The  obligation of
Buyer to consummate the  transactions  to be performed by it in connection  with
the Closing is subject to satisfaction of the following conditions:

                          (i) the transactions under that certain Asset Purchase
        Agreement  entered  into as of August  31,  2004,  as amended by a First
        Amendment dated as of September 17, 2004, to which Buyer's  affiliate is
        a party concerning Fair Grounds Corporation shall have closed;

                          (ii) each of the consents  identified in Sections 3(c)
        and 4(c) shall have been  obtained  from the  Governmental  Entities and
        other third parties, as applicable, on terms and conditions satisfactory
        to Buyer, in its sole discretion, and shall be in full force and effect;

                          (iii) Buyer shall have  received and approved a survey
        acceptable  to Buyer of the Owned Real  Property  and said survey  shall
        disclose,  among  other  things,  (a) that  there are no gaps  contained
        within the Owned  Real  Property  and (b) that  there are no  unrecorded
        easements,  servitudes,  discrepancies,  or conflicts in boundary lines,
        shortages  in areas or  encroachments.  Buyer  shall have  received  and
        approved  a  title   commitment  and  form  of  title  insurance  policy
        acceptable to Buyer (those matters disclosed in the title commitment and
        title  insurance  policy which are Permitted  Encumbrances  described in
        Section (d) of the Disclosure Letter previously  accepted by Buyer shall
        be deemed  acceptable) issued by a reputable title insurance company for
        a title insurance  policy (which title insurance policy shall contain an
        "extended coverage  endorsement," a "zoning endorsement," and such other
        endorsements  as are customary  and  reasonable)  insuring  title to the
        Owned Real Property in the amount of the Purchase Price allocated to the
        Owned Real Property,  covering the Owned Real Property,  naming Buyer as
        the proposed insured and having an effective date after the date of this
        Agreement;

                          (iv)  there  shall  not be any  injunction,  judgment,
        order, decree or ruling in effect preventing  consummation of any of the
        transactions contemplated by this Agreement;

                          (v) on or before the  Closing  Date,  there  shall not
        have occurred any material destruction or significant physical change to
        the Acquired  Assets of Seller taken as a whole,  whether or not insured
        (Seller  shall be  obligated  to give Buyer notice of any of the same as
        soon as possible after the occurrence thereof);

                          (vi) the  representations  and  warranties  of  Seller
        contained in ss.3 shall be true and correct in all material  respects as
        of the Closing with the same effect as though such  representations  and
        warranties had been made on and as of that date;

                          (vii) Seller shall have  performed  and complied  with
        all of its  covenants  hereunder  in all material  respects  through the
        Closing; and

                                       21





                          (viii)   Seller  shall  have   delivered  to  Buyer  a
        certificate to the effect that each of the conditions specified above in
        ss.7(a)(vi) and (vii) is satisfied in all respects.

Buyer may waive any condition specified in this ss.7(a) if it executes a writing
so stating at or prior to the Closing.

                     (b)  CONDITIONS TO OBLIGATION OF SELLER.  The obligation of
Seller to consummate the  transactions  to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:

                          (i) the transactions under that certain Asset Purchase
        Agreement  entered into August 31, 2004, as amended by a First Amendment
        dated as of September 17, 2004,  to which  Buyer's  affiliate is a party
        concerning Fair Grounds Corporation shall have closed;

                          (ii)  there  shall  not be any  injunction,  judgment,
        order, decree or ruling in effect preventing  consummation of any of the
        transactions contemplated by this Agreement;

                          (iii)  the  representations  and  warranties  of Buyer
        contained in ss.4 shall be true and correct in all material  respects as
        of the Closing with the same effect as though such  representations  and
        warranties had been made on and as of that date;

                          (iv) Buyer shall have  performed and complied with all
        of its covenants hereunder in all material respects through the Closing;
        and

                          (v) Buyer shall have delivered to Seller a certificate
        to  the  effect  that  each  of  the  conditions   specified   above  in
        ss.7(b)(iii) and (iv) is satisfied in all respects.

Seller may waive any  condition  specified in this ss.7(b) if Seller  executes a
writing so stating at or prior to the Closing.

                8. TERMINATION.

                     (a) PERMITTED TERMINATION.

                          (i) This Agreement may, prior to or at the Closing, be
        terminated by written consent of Seller and Buyer.

                          (ii) If any of the  conditions set forth in ss.7(a)(i)
        or  ss.7(b)(i)  have not been met on or before  October 15,  2004,  this
        Agreement will automatically  terminate without further action by either
        Buyer or Seller unless otherwise agreed by Buyer and Seller.

                                       22





                          (iii) If the  conditions  set  forth  in  ss.7(a)(ii),
        (iii),  (iv),  or (v) have not been met on or prior to October 15, 2004,
        Buyer may terminate this Agreement by written notice to Seller.

                          (iv) If the condition set forth in ss.7(b)(ii) has not
        been met on or prior to October  15,  2004,  Seller may  terminate  this
        Agreement by written notice to Buyer.

                          (v) If the  Closing  has  not  occurred  on or  before
        October 15, 2004,  unless  extended by  agreement  of the parties,  this
        Agreement shall terminate,  but subject to and without  affecting in any
        way any rights or claims any party to this  Agreement  may have  against
        any  other  party  to this  Agreement  for  breach  of  this  Agreement,
        including  any  claim  for  the  remedy  of  specific   performance  and
        injunction for breach of this Agreement.

                     (b) TERMINATION UPON DEFAULT.

                          (i) If the conditions set forth in ss.7(a)(vi),  (vii)
        or (viii) are not met on or before the Closing, Buyer may terminate this
        Agreement  by written  notice to Seller.  It is agreed that Buyer has no
        adequate remedy at law for breach of this Agreement by Seller, and Buyer
        may pursue any and all remedies,  at law or in equity,  for such breach,
        including specific performance and injunction.

                          (ii) If the conditions set forth in ss.7(b)(iii), (iv)
        or (v) are not met on or before the Closing,  then Seller may  terminate
        this Agreement by written notice to Buyer.

                9.   SURVIVAL   OF   REPRESENTATIONS    AND   WARRANTIES.    The
representations  and warranties of the Parties contained in this Agreement shall
survive  the  Closing  for a period of two (2)  years;  provided,  however,  the
representations and warranties in ss.3(h), ss.3(i) and ss.3(q) shall survive the
Closing  without any time limit.  The  representations  and warranties  shall be
unaffected by any investigation made by any party hereto.

                10. INDEMNIFICATION.

                     (a) BY SELLER.  Seller shall  indemnify  and hold  harmless
Buyer from and against any damage, deficiency,  loss, action, judgment, cost and
expense  (including  reasonable  attorneys' fees to the extent permitted by law)
(collectively, "Buyer's Losses") arising out of or resulting from (i) any breach
by Seller of any representation,  warranty,  covenant or other provision of this
Agreement,  and (ii) any  liabilities  or  obligations  of Seller  which are not
Assumed Liabilities.

                     (b) BY  BUYER.  Buyer  shall  indemnify  and hold  harmless
Seller from and against any damage, deficiency, loss, action, judgment, cost and
expense  (including  reasonable  attorneys' fees to the extent permitted by law)
(collectively,  "Seller's  Losses")  arising  out of or  resulting  from (i) any
breach by Buyer of any representation,  warranty, covenant or other provision of
this Agreement, and (ii) the Assumed Liabilities.

                                       23





                     (c)  LIMITATIONS  ON  AMOUNT-SELLER.  Seller  will  have no
liability for  indemnification  with respect to matters described in ss.10(a)(i)
for breach of a  representation  or warranty  until the total Buyer  Losses with
respect to all such  matters  exceeds  $100,000,  at which point  Seller will be
liable  for all  Buyer  Losses  exceeding  the first  $25,000,  but in any event
subject to a maximum of the Purchase  Price for all such claims.  However,  this
ss.10(c) will not apply to any breach of a representation  and warranty of which
Seller had Knowledge at any time prior to the date on which such  representation
and warranty is made.

                     (d)  LIMITATIONS  ON  AMOUNT-BUYER.   Buyer  will  have  no
liability for  indemnification  with respect to matters described in ss.10(b)(i)
for a breach of a representation  or warranty until the total Seller Losses with
respect to all such  matters  exceeds  $100,000,  at which  point  Buyer will be
liable for all  Seller  Losses  exceeding  the first  $25,000,  but in any event
subject to a maximum of the Purchase  Price for all such claims.  However,  this
ss.10(d) will not apply to any breach of a representation  and warranty of which
Buyer had  Knowledge at any time prior to the date on which such  representation
and warranty is made.

                11. MISCELLANEOUS.

                     (a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement  relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other  Party;  provided,  however,  that any  Party  may make any  public
disclosure  it  believes  in good faith is  required  by  applicable  law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the  disclosing  Party will use its  reasonable  best efforts to advise the
other Party prior to making the disclosure).

                     (b) NO THIRD-PARTY BENEFICIARIES.  This Agreement shall not
confer any rights or remedies  upon any person  other than the Parties and their
respective successors and permitted assigns.

                     (c)  ENTIRE  AGREEMENT.   This  Agreement   (including  the
exhibits,  schedules and Disclosure  Letter referred to herein)  constitutes the
entire  agreement  between the Parties and supersedes any prior  understandings,
agreements,  or representations  by or between the Parties,  written or oral, to
the extent they related in any way to the subject matter hereof.

                     (d)  SUCCESSIONS  AND  ASSIGNMENT.  This Agreement shall be
binding  upon and inure to the  benefit of the  Parties  named  herein and their
respective  successors  and permitted  assigns.  No Party may assign either this
Agreement or any of its rights,  interests, or obligations hereunder without the
prior  written  approval of the other Party;  provided that the Buyer may assign
all or part of its rights and  obligations  with respect to the Acquired  Assets
and the Assumed Liabilities to one or more of its affiliates  ("affiliate" being
any entity in which Buyer or Churchill  owns a majority of the equity  interests
and/or over which either has decisional control).

                     (e) RISK OF LOSS.  Seller  shall bear all risk of loss with
respect to the  Acquired  Assets  prior to the Closing  Date.  Seller  agrees to
continue to carry or cause to be

                                       24





carried to the Closing Date the insurance  coverage  which is presently  carried
relating to the  Acquired  Assets as set forth on Section (m) of the  Disclosure
Letter.

                     (f) COUNTERPARTS.  This Agreement may be executed in one or
more  counterparts,  each of which shall be deemed an original  but all of which
together will constitute one and the same instrument.

                     (g)  HEADINGS.  The  section  headings  contained  in  this
Agreement are inserted for convenience  only and shall not affect in any way the
meaning or interpretation of this Agreement.

                     (h) NOTICES. All notices,  requests,  demands,  claims, and
other communications  hereunder will be in writing. Any notice, request, demand,
claim, or other communication  hereunder shall be deemed duly given if (and then
two Business  Days after) it is sent by  registered  or certified  mail,  return
receipt requested,  postage prepaid,  and addressed to the intended recipient as
set forth below:

            If to Seller:      Finish Line Management Corp.
                               c/o Bryan G. Krantz
                               85 Chateau Latour
                               Kenner, Louisiana 70065

            Copy to:           David R. Sherman
                               Chehardy, Sherman, Ellis, Breslin, Murray, Recile
                                & Griffith, LLP
                               P.O. Box 931 Metaire,
                               Louisiana 70004-0931
                               Facsimile: (504)833-8080

            If to Buyer:       Churchill Downs Louisiana Horseracing
                                Company, L.L.C.
                               c/o Churchill Downs Incorporated
                               700 Central Avenue
                               Louisville, Kentucky 40208
                               Attn: Rebecca C. Reed
                               Facsimile: (502) 636-4439

            Copy to:           Wyatt, Tarrant & Combs, LLP
                               500 West Jefferson Street, Suite 2800
                               Louisville, Kentucky 40202
                               Attn: Robert A. Heath
                               Facsimile: (502) 589-0309

Any Party may send any notice,  request,  demand,  claim, or other communication
hereunder  to the intended  recipient at the address set forth above,  using any
other means (including personal delivery,  expedited courier, messenger service,
telecopy,  ordinary  mail, or  electronic  mail),  but no such notice,  request,
demand, claim, or other communication shall be deemed to have been

                                       25





duly given unless and until it actually is received by the  intended  recipient.
Any Party may change the address to which notices,  requests,  demands,  claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.

                     (i) GOVERNING LAW. This Agreement  shall be governed by and
construed in accordance with the domestic laws of the State of Louisiana without
giving effect (to the extent  permitted by law) to any choice or conflict of law
provision or rule (whether of the State of Louisiana or any other  jurisdiction)
that would cause the application of the laws of any jurisdiction  other than the
State of Louisiana.

                     (j) AMENDMENTS AND WAIVER. No amendment of any provision of
this Agreement  shall be valid unless the same shall be in writing and signed by
Buyer and Seller. No waiver by any Party of any default,  misrepresentation,  or
breach of warranty or covenant  hereunder,  whether intentional or not, shall be
deemed  to  extend to any prior or  subsequent  default,  misrepresentation,  or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.

                     (k) EXPENSES.  Each of Buyer and Seller,  will bear its own
costs and  expenses  (including  fees and  expenses of  attorneys,  accountants,
finders, financial advisors and other professionals) incurred in connection with
this Agreement and the transactions contemplated hereby.

                     (l) CONSTRUCTION.  The Parties have participated jointly in
the  negotiation  and drafting of this  Agreement.  In the event an ambiguity or
question of intent or interpretation  arises,  this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise  favoring or  disfavoring  any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign  statute  or law  shall  be  deemed  also  to  refer  to all  rules  and
regulations promulgated thereunder,  unless the context requires otherwise.  The
word "including" shall mean including without limitation.

                     (m)  INCORPORATION OF EXHIBITS AND SCHEDULES.  The Exhibits
and Schedules  identified in this Agreement are incorporated herein by reference
and made a part hereof.

                12.   CHURCHILL   COVENANT.   Churchill   intervenes  into  this
Agreement,  and  does  hereby  jointly,  severally  and  solidarily  irrevocably
obligate  itself  unconditionally  with Buyer to the  performance  of all of the
obligations of Buyer under this Agreement.  Churchill's  obligations  under this
Agreement  shall  terminate  to the extent that Buyer's  obligations  under this
Agreement terminate.

                                     * * * *

                                       26






                IN WITNESS  WHEREOF,  the  Parties  hereto  have  executed  this
Agreement as of the date first above written.

                                     "BUYER"

                                     CHURCHILL DOWNS LOUISIANA HORSE
                                     RACING COMPANY, L.L.C.


                                     By:/s/ RANDALL E. SOTH

                                     Name: RANDALL E. SOTH

                                     Title:  PRESIDENT


                                     "SELLER"

                                     FINISH LINE MANAGEMENT CORP.


                                     By:/s/ BRYAN G. KRANTZ

                                     Name:  BRYAN G. KRANTZ

                                     Title:  PRESIDENT

                                       27





                                     "CHURCHILL""

                                     CHURCHILL DOWNS INCORPORATED


                                     By:/s/ M. E. MILLER

                                     Name: /s/ M.E. MILLER

                                     Title: EVP/CFO


                                     "KRANTZ"

                                     /s/ BRYAN G. KRANTZ
                                     BRYAN G. KRANTZ


                                       28




Exhibits and schedules to the Asset Purchase  Agreement have been  intentionally
omitted  because they are not material.  The  registrant  agrees to furnish such
omitted exhibits and schedules supplementally to the Commission upon request.

EX-2.3

                                                                EXHIBIT 2.3


                                                            EXECUTION COPY













                            STOCK PURCHASE AGREEMENT


                                 By and Between


              CHURCHILL DOWNS LOUISIANA VIDEO POKER COMPANY, L.L.C.
                                   (Purchaser)



                                       And



                                STEVEN M. RITTVO
                                 RALPH CAPITELLI
                               T. CAREY WICKER III

                                       And

                            LOUISIANA VENTURES, INC.
                                    (Sellers)






                          Dated as of October 14, 2004





                                                              EXECUTION COPY

                                TABLE OF CONTENTS

                                                                         PAGE

RECITALS....................................................................1

DEFINITIONS.................................................................1

ARTICLE 1 SALE AND PURCHASE OF SHARES; CLOSING..............................4
Section 1.01  Sale of Stock.................................................4
Section 1.02  Purchase Price................................................4
Section 1.03  Reimbursements................................................4
Section 1.04  Closing.......................................................4
Section 1.05  Payment and Closing Deliveries................................5
Section 1.06  Dividends Prior To Closing....................................6
Section 1.07  Right to Revenues; Risk of Loss...............................7

ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLERS.........................7
Section 2.01  Ownership.....................................................7
Section 2.02  Authority; Enforceability.....................................7
Section 2.03  Organization; Authority.......................................8
Section 2.04  Subsidiaries..................................................8
Section 2.05  Capital Stock.................................................8
Section 2.06  Title to Stock, Liens, Etc....................................9
Section 2.07  Consents and Approvals; Conflicts.............................9
Section 2.08  Financial Statements..........................................9
Section 2.09  Absence of Certain Changes....................................9
Section 2.10  Legal Proceedings; Etc........................................10
Section 2.11  Permits; Compliance With Laws.................................10
Section 2.12  Title to Property; Condition of Property;
              Real Property Leases, Etc.....................................11
Section 2.13  Environmental Matters.........................................12
Section 2.14  Insurance.....................................................12
Section 2.15  Contracts.....................................................13
Section 2.16  Employees.....................................................14
Section 2.17  Employee Benefit Plans........................................14
Section 2.18  Labor Relations...............................................16
Section 2.19  Potential Conflicts of Interest...............................17
Section 2.20  Patents, Trademarks, Etc......................................17
Section 2.21  Accounts Receivable...........................................17
Section 2.22  Taxes.........................................................17
Section 2.23  Indebtedness..................................................19
Section 2.24  Officers and Directors, Bank Accounts,
              Signing Authority, Powers of Attorney.........................19
Section 2.25  Minute Books, Etc.............................................19
Section 2.26  Broker........................................................20
Section 2.27  Accuracy of Representations and Warranties....................20


                                       i


                                                              EXECUTION COPY


Section 2.28  Effectiveness of Representations and Warranties...............20

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................20
Section 3.01  Organization of Purchaser.....................................20
Section 3.02  Authority; Enforceability.....................................20
Section 3.03  Consents and Approvals; Conflicts.............................20
Section 3.04  Investment Representation.....................................21
Section 3.05  No Representations and Warranties; Conduct of Due Diligence...21
Section 3.06  Brokerage Fees................................................21
Section 3.07  Securities Act Representations................................21
Section 3.08  Effectiveness of Representations and Warranties...............22

ARTICLE 4 PRE-CLOSING COVENANTS.............................................22
Section 4.01  Legal Requirements............................................22
Section 4.02  Access To Properties and Records..............................22
Section 4.03  Conduct of Business...........................................22
Section 4.04  Public Statements.............................................24

ARTICLE 5 CLOSING CONDITIONS................................................24
Section 5.01  Conditions Applicable To All Parties..........................24
Section 5.02  Conditions To Obligations of Purchaser........................24
Section 5.03  Conditions to Obligations of Sellers..........................26

ARTICLE 6 POST-CLOSING COVENANTS............................................27
Section 6.01  General.......................................................27
Section 6.02  Employee Retention............................................27
Section 6.03  Non-competition...............................................28
Section 6.04  Alliance Gaming Corporation 401K Profit Sharing Plan..........30

ARTICLE 7 TERMINATION AND AMENDMENT.........................................30
Section 7.01  Termination...................................................30
Section 7.02  Effect of Termination.........................................30
Section 7.03  Amendment.....................................................31
Section 7.04  Extension; Waiver.............................................31

ARTICLE 8 TAX MATTERS.......................................................31
Section 8.01  Additional Definitions........................................31
Section 8.02  Preparation and Filing of Tax Returns.........................31
Section 8.03  Sellers' Contest Rights.......................................32
Section 8.04  Purchaser's Contest Rights....................................32
Section 8.05  Notification Requirements.....................................33
Section 8.06  Cooperation...................................................33
Section 8.07  Retention of Data and Documentation...........................33
Section 8.08  Tax Audit Costs...............................................34
Section 8.09  Tax Sharing Agreements........................................34
Section 8.10  Returns for Periods Through the Closing Date..................34
Section 8.11  Carrybacks....................................................34

                                       ii



                                                             EXECUTION COPY


Section 8.12  Retention of Carryovers.......................................34

ARTICLE 9 INDEMNIFICATION; REMEDIES.........................................34
Section 9.01  Indemnification By Sellers....................................34
Section 9.02  Indemnification By Purchaser..................................35
Section 9.03  Notice and Defense of Third Party Claims......................35
Section 9.04  Exclusive Remedy..............................................36

ARTICLE 10 MISCELLANEOUS....................................................36
Section 10.01 Confidentiality...............................................36
Section 10.02 Survival of Representations, Warranties and Agreements........37
Section 10.03 Notices.......................................................37
Section 10.04 Headings; Gender..............................................38
Section 10.05 Entire Agreement; No Third Party Beneficiaries................39
Section 10.06 Governing Law.................................................39
Section 10.07 Assignment....................................................39
Section 10.08 Severability..................................................39
Section 10.09 Counterparts..................................................39
Section 10.10 Expenses......................................................39
Section 10.11 Amendments and Waivers........................................39
Section 10.12 Construction..................................................40
Section 10.13 Understanding.................................................40
Section 10.14 Arbitration...................................................40

ARTICLE 11 INTERVENORS......................................................40
Section 11.01 Spousal Consent...............................................40

                                  EXHIBIT INDEX

Exhibit A-                 Operating Agreement dated March 9, 1992
                           Addendum dated November 9, 1995
                           Second Addendum dated November 1, 2001
                           Third Addendum dated December 4, 2001
                           Fourth Addendum dated April 30, 2003

Exhibit B -                Form of Escrow Agreement

Exhibit C -                Adam and Reese LLP Opinion

Exhibit D -                LHBPA Release

Exhibit E -                Krantz Release

Exhibit F -                Withdrawal of Objection to Assignment

Exhibit G -                Spousal Consent


                                      iii




                            STOCK PURCHASE AGREEMENT



         THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as
of the day of the 14th  day of  October,  2004 by and  between  Churchill  Downs
Louisiana Video Poker Company,  L.L.C., a Louisiana limited  liability  company,
("Purchaser");  STEVEN M. RITTVO,  RALPH  CAPITELLI and T. CAREY WICKER III, all
Louisiana residents,  and LOUISIANA VENTURES, INC., a Nevada corporation ("LVI")
(each a "Seller" and all collectively "Sellers").

                                    RECITALS

         WHEREAS,  Sellers  are the owners of all of the issued and  outstanding
shares of all  classes of common  stock of Video  Services,  Inc.,  a  Louisiana
corporation ("VSI");

         WHEREAS,  VSI  is  engaged  in  the  business  of  selecting,   owning,
installing,  operating and maintaining  video poker devices and other electronic
gaming machines at the Fair Grounds Race Course and at off-track betting parlors
operated in the greater New Orleans, Louisiana area, by or under the auspices of
the Fair Grounds Race Course (the "Business"); and

         WHEREAS,  Sellers desire to sell to Purchaser and Purchaser  desires to
purchase from Sellers,  all of the issued and outstanding shares of common stock
of VSI for the  consideration  and subject to the terms and conditions set forth
in this Agreement.

         NOW,  THEREFORE,  for  and in  consideration  of the  mutual  promises,
covenants  and   agreements   set  forth  herein,   and  in  reliance  upon  the
representations  and warranties  contained herein,  Purchaser and Sellers do now
agree as follows:

                                   DEFINITIONS

         In addition to the other  defined  terms used  herein,  as used in this
Agreement,  the  following  terms  when  capitalized  shall  have  the  meanings
indicated herein. All defined terms shall include the singular and the plural.

         (a) "AFFILIATE"  shall mean with respect to any specified  Person,  any
other Person directly or indirectly  controlling,  controlled by or under direct
or indirect common control with such Person.

         (b) "APPLICABLE LAW" shall mean any statute, law, rule or regulation or
any judgment,  order, writ,  injunction or decree of any Governmental  Entity to
which a specified Person or its property is subject.

         (c) "BANKROLL  AMOUNT" shall mean  $824,000  (representing  the imprest
bank balances) plus the Undeposited Net Win as of 2:01 A.M. on the Closing Date.

         (c) "CHANGE OF CONTROL"  shall be deemed to have  occurred upon (i) the

                                       1




consummation  of a tender for or purchase of more than fifty  percent (50%) of a
company's  capital  stock by a third  party,  (ii) a  merger,  consolidation  or
recapitalization  of a  company  such  that  the  stockholders  of  the  company
immediately  prior to the  consummation  of such  transaction  possess less than
fifty percent (50%) of the voting securities of the surviving entity immediately
after  the  transaction  (determined  on  a  fully-diluted  basis  assuming  the
conversion of all  convertible  securities  of such Person),  or (iii) the sale,
lease  or other  disposition  of all or  substantially  all of the  assets  of a
company.

         (d) "CLOSING"  shall mean the  consummation of the Purchase (as defined
in Section 1.01) and the other transactions contemplated by this Agreement.

         (e) "CLOSING DATE" shall mean the date on which the Closing occurs.

         (f)  "DISCLOSURE  LETTER"  shall mean that  certain  Disclosure  Letter
delivered to Purchaser by Sellers on or before  October 14th,  2004, the purpose
of which is to disclose certain matters related to this Agreement.

         (g) "ENCUMBRANCES" shall mean adverse claims,  pledges, liens, defects,
leases,  licenses,  equities,  conditional  sales  contracts,  charges,  claims,
encumbrances,  security interests, easements,  restrictions,  chattel mortgages,
mortgages  or  deeds  of  trust,  of any  kind  or  nature  whatsoever,  and any
preferential  arrangement  or  restriction  of  any  kind,  including,   without
limitation,  any restriction on the use, voting, transfer,  receipt of income or
other exercise of any attribute of ownership.

         (h)  "GOVERNMENTAL  ENTITY"  shall  mean any court or  tribunal  in any
jurisdiction or any public, governmental or regulatory body, agency, department,
commission, board, bureau or other authority or instrumentality.

         (i)  "INDEBTEDNESS"  shall  mean,  as  applied to any  Person,  (i) all
indebtedness  of such Person for borrowed money,  whether current or funded,  or
secured or  unsecured,  (ii) all  indebtedness  of such Person for the  deferred
purchase price of property or services  represented by a note or other security,
(iii) all  indebtedness  of such Person created or arising under any conditional
sale or other title  retention  agreement  with respect to property  acquired by
such Person  (even  though the rights and remedies of the seller or lender under
such  agreement in the event of default are limited to  repossession  or sale of
such property), (iv) all indebtedness of such Person secured by a purchase money
mortgage or other lien to secure all or part of the  purchase  price of property
subject to such mortgage or lien, (v) all pre-Closing  obligations  under leases
which  shall  have  been or must  be,  in  accordance  with  generally  accepted
accounting  principles,  recorded  as  capital  leases in  respect of which such
Person is liable as  lessee,  (vi) any  liability  of such  Person in respect of
banker's  acceptances  or letters of credit,  (vii) any  liability in respect of
interest,  fees or other  charges in respect of any  indebtedness  referred to a
clauses (i) through (vi) above,  (viii) all indebtedness  referred to in clauses
(i) through  (vii) above which is  directly  or  indirectly  guaranteed  by such
Person or which such Person has agreed  (contingently  or otherwise) to purchase
or otherwise  acquire or in respect of which it has otherwise assured a creditor
against loss and (ix) all other accrued  liabilities  that appear on the Balance
Sheet.

                                       2




         (j) "IRS" shall mean the United States Internal Revenue Service.

         (k)  "KNOWLEDGE"  (including,  without  limitation,  the terms  "KNOW",
"KNOWING",  "KNOWLEDGE",  "BEST KNOWLEDGE", or "TO THE BEST KNOWLEDGE OF") shall
mean with respect to each Seller the actual  knowledge of such Seller,  or where
applicable, their officers or directors, without independent investigation.

         (l) "LEASES"  shall mean any  executory  lease to which VSI is subject,
having  future  rental  payments  of more than $5,000 in the  aggregate  and any
executory  lease to which VSI is subject where the future rental  payments under
such lease,  when  aggregated  with the future rental  payments  under all other
executory  leases  to  which  VSI is a  party,  are  more  than  $10,000  in the
aggregate, all shown on Section 2.12(d) of the Disclosure Letter.

         (m) "MATERIAL ADVERSE EFFECT" shall mean any  circumstance,  change in,
or effect on the Business that,  individually or in the aggregate with any other
circumstances, changes in, or effects on, the Business, is materially adverse to
the Business,  operations,  results of operations or financial  condition of VSI
excluding from the foregoing any event,  change or  circumstance  arising out of
(i) the compliance by VSI with the terms and conditions of this Agreement,  (ii)
general  economic or financial  conditions  which are not unique to VSI but also
affect other Persons who  participate or are engaged in the lines of business in
which VSI  participates or is engaged,  or (iii) changes  resulting from acts of
terrorism or acts of war or escalation of hostilities,  whether occurring within
or outside the United  States,  or any effect of any such acts of hostilities on
general economic or other conditions.

         (n) "OPERATING AGREEMENT" shall mean the agreement between VSI and Fair
Grounds  Corporation,  Jefferson  Downs  Corporation  and Finish Line Management
Corporation dated March 9, 1992, as amended, attached as Exhibit "A", in globo.

         (o) "PARTY" shall mean singularly one of the persons or plurally two or
more of the persons executing this Agreement.

         (p) "PERSON" shall mean an individual,  firm,  corporation,  general or
limited partnership,  limited liability company,  limited liability partnership,
joint   venture,   trust,   governmental   authority   or   body,   association,
unincorporated organization or other entity.

         (q) "PROCEEDINGS" shall mean any suit, action,  proceeding,  dispute or
claim before or investigation by any Governmental Entity.

         (r) "STOCK" shall mean, collectively, all of the authorized, issued and
outstanding shares of Class A (non-voting) common stock, no par value per share,
and all of the  authorized,  issued and  outstanding  shares of Class B (voting)
common stock, no par value per share, of VSI representing  100% of the aggregate
authorized, issued and outstanding capital stock, voting and non-voting, of VSI.

         (s) "TAX" shall mean any federal, state, local or foreign income, gross
receipt,

                                       3




license,  net equity payroll,  payroll,  employment  excise,  severance,  stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), custom duties, capital stock,  franchise,  import and export, profits,
withholding, social security, unemployment,  disability, real property, personal
property, intangible property, sales, use, transfer,  registration, value added,
alternative, or add-on-minimum, estimated, or other government tax, duty, fee or
charge of any kind  whatsoever,  including  any interest,  penalty,  or addition
thereto, whether disputed or not.

         (t)  "UNDEPOSITED  NET WIN" shall mean the amount of all of VSI's gross
deposits  less all fully paid  payouts,  to the extent  that such amount has not
been deposited in VSI's bank accounts as of 2:01 A.M. on the Closing Date.

         (t)  "VSI  GROUP"  shall  mean  VSI and all  entities  included  in any
affiliated  group with VSI for which  consolidated  or combined Tax Returns were
filed or are or were required to be filed.

                                    ARTICLE 1
                      SALE AND PURCHASE OF SHARES; CLOSING

         SECTION 1.01 SALE OF STOCK.  Subject to the terms and conditions herein
stated,  at the  Closing  Sellers  shall sell,  transfer,  assign and deliver to
Purchaser, and Purchaser shall purchase from Sellers, all of the Stock, all with
full warranty of title and free and clear of all  Encumbrances,  in exchange for
the payment of the Purchase Price described below (the "PURCHASE").

         SECTION 1.02 PURCHASE  PRICE.  Purchaser  shall pay to Sellers,  as the
purchase  price for the  Stock,  an  aggregate  amount of Four  Million  Dollars
($4,000,000)  (the  "PURCHASE  PRICE"),  pursuant to the  payment  instructions,
percentages  and wire  instructions  attached as Section 1.02 of the  Disclosure
Letter.

         SECTION 1.03 REIMBURSEMENTS. The Purchaser shall, at Closing, reimburse
Sellers as follows (collectively, the "REIMBURSEMENTS").

         (a) Purchaser shall reimburse  Sellers for the cost of all licenses and
permits paid by VSI for the year  2004-2005  as set forth on Section  1.03(a) of
the Disclosure Letter.

         (b)  Purchaser  shall  reimburse  Sellers for the pro rata share of all
taxes or other fees paid by or on behalf of VSI prior to Closing as set forth on
Section 1.03(b) of the Disclosure Letter.

         SECTION  1.04  CLOSING.  Subject  to  satisfaction  or  waiver  of  the
conditions  specified in Article 5 hereof, the Closing shall take place at 10:00
am. local time on October 14, 2004 at the law offices of Lemle & Kelleher,  21st
Floor,  601 Poydras Street,  New Orleans,  Louisiana 70130 or at such other time
and place as Purchaser and Sellers may agree.

                                       4




         SECTION 1.05 PAYMENT AND CLOSING DELIVERIES.

         At the Closing:

                  (a)      Purchaser  shall  have  caused  to be  delivered  the
                           Purchase   Price  by  wire  transfer  of  immediately
                           available  funds to Sellers in the  percentage as set
                           forth in Section 1.02 of the Disclosure Letter;

                  (b)      Purchaser  shall  have  caused  to be  delivered  the
                           amounts due as (i) Reimbursements by wire transfer of
                           immediately   available   funds   pursuant   to   the
                           percentages and wire instructions attached as Section
                           1.02 of the Disclosure  Letter  hereto,  and (ii) the
                           Bankroll  Amount  by  wire  transfer  of  immediately
                           available  funds  pursuant  to the  terms of  Section
                           1.06;

                  (c)      Sellers   shall   deliver  to  Purchaser   (i)  stock
                           certificates  representing the Stock duly endorsed in
                           blank,  or  accompanied by stock powers duly executed
                           in blank, in a form satisfactory to Purchaser,  which
                           shall  transfer to Purchaser  good title to the Stock
                           free and clear of any  Encumbrance,  and (ii) written
                           resignations  of all  officers  and  directors of VSI
                           other than Fred Bergquist;

                  (d)      Sellers shall have  deposited  into the sweep account
                           designated  to the state  police as the account  from
                           which  video   poker   taxes  are  to  be  paid,   in
                           immediately  available funds, a sum sufficient to pay
                           all video poker taxes due through the Closing Date;

                  (e)      Sellers  shall deliver the opinion of Adams and Reese
                           LLP in substantially the form attached as Exhibit "C"
                           hereto;

                  (f)      Sellers  shall and shall  cause  VSI to  execute  and
                           deliver  to  Purchaser  a  Mutual  Release  with  the
                           Louisiana   Horsemen's   Benevolent   and  Protective
                           Association  1993,  Inc.  in  substantially  the form
                           attached as Exhibit "D" hereto (the "LHBPA RELEASE");

                  (g)      Purchaser  shall deliver to Sellers  counterparts  to
                           the  LHBPA   Release,   executed  by  the   Louisiana
                           Horsemen's  Benevolent  and  Protective   Association
                           1993, Inc.;

                  (h)      Sellers  shall and shall  cause  VSI to  execute  and
                           deliver  to  Purchaser  a Mutual  Release  with  Fair
                           Grounds Corporation,  Bryan G. Krantz, Vickie Krantz,
                           Family  Racing  Venture,   L.L.C.,  Gentilly  Gaming,
                           L.L.C.,  Finish Line  Management  Corp.,  Continental
                           Advertising,  Inc., F.G. Staffing Services,  Inc. and
                           Fair   Grounds   International    Ventures,    L.L.C.
                           (collectively, the "KRANTZ PARTIES") in substantially
                           the form  attached as Exhibit "E" hereto (the "KRANTZ
                           RELEASE");

                                       5




                  (i)      Purchaser  shall deliver to Sellers  counterparts  to
                           the Krantz Release, executed by the Krantz Parties;

                  (j)      Sellers  shall  deliver to Purchaser a Withdrawal  of
                           Objection to  Assignment  and  Assumption of Contract
                           and Waiver of Cure in substantially the form attached
                           as Exhibit "F" hereto; and

                  (k)      Sellers and Purchaser  shall (i) provide to the other
                           such certificates,  agreements and instruments as are
                           required  to  be  delivered  under  Article  5,  (ii)
                           provide  to the  others  proof or  indication  of the
                           satisfaction or waiver of the conditions set forth in
                           Article  5, and (iii)  take such  other  action as is
                           required to consummate the transactions  contemplated
                           by this Agreement.

         SECTION 1.06  INDEBTEDNESS;  DIVIDENDS  PRIOR TO CLOSING;  POST-CLOSING
PAYMENTS.

         (a) Sellers shall cause VSI to discharge all  Indebtedness  outstanding
as of 10:00 A.M. on the Closing Date.

         (b) Sellers shall retain as earned  income all cash on hand,  including
but not  limited to cash in all bank  accounts,  cash in the change bank at each
location and other miscellaneous cash that is used in the daily operation of VSI
as of 2:01 A.M. on the Closing Date after the  discharge of  Indebtedness  under
Section  1.06(a)  (the  "CASH  ON  HAND").  Sellers,  with a  representative  of
Purchaser present,  will count down the final Cash on Hand in the cage and count
rooms  beginning at 8:00 A.M. on the Closing Date (the "FINAL CASH  COUNT").  At
the Closing,  in the form of a cash dividend,  (i) VSI shall disburse all of the
available Cash on Hand MINUS $5,000 in petty cash MINUS the Bankroll Amount,  to
Sellers by  immediately  available  funds pursuant to the terms of the Operating
Agreement of VSI and Article 4, Section 4.1(b) of the Articles of  Incorporation
of VSI,  all in the  percentage  allocation  set  forth on  Section  1.06 of the
Disclosure  Letter,  and (ii) Purchaser shall pay to Sellers the Bankroll Amount
PLUS the  Reimbursements  plus $5,000 in petty cash by (A) making wire transfers
of the Bankroll  Amount minus the  Undeposited  Net Win PLUS the  Reimbursements
PLUS $5,000 in petty cash MINUS $500,000 as of the Closing to the Sellers in the
percentage  allocation set forth on Section 1.06 of the Disclosure  Letter,  (B)
writing and  delivering a check to each of the Sellers for the Seller's share of
the Undeposited  Net Win in the percentage  allocation set forth in Section 1.06
of the Disclosure  Letter,  and (C) making a wire transfer of $500,000 as of the
Closing to Adams & Reese, as escrow agent for the Sellers (the "ESCROW  AGENT"),
to be held by the  Escrow  Agent  pursuant  to the  terms of this  Section  1.06
(collectively, the "DIVIDEND").

         (c) The Escrow  Agent shall retain the $500,000 for sixty days from the
Closing Date in order to discharge any  Indebtedness  that was outstanding as of
10:00 A.M. on the Closing Date that was not  discharged  as of the Closing Date.
LVI shall  instruct  the Escrow  Agent,  on the date that is sixty days from the
Closing  Date,  to disburse  any funds  remaining  in the escrow  account to the
Sellers by check or  immediately  available  funds  pursuant to the terms of the
Operating Agreement of VSI and Article 4, Section 4.1(b) of

                                       6





the Articles of Incorporation of VSI, all in the percentage allocation set forth
on Section 1.06 of the Disclosure Letter.

         (d) In the event of any  dispute  between  Sellers  on the one hand and
Purchaser  on the  other as to how the funds  deposited  into  escrow  should be
disbursed,  the Escrow Agent may retain all disputed  funds until  resolution of
the dispute by the Parties or pursuant to Section 10.14. Seller,  Purchasers and
Escrow  Agent  will  execute  the  Escrow  Agreement  substantially  in the form
attached hereto as Exhibit "B".

         SECTION  1.07  RIGHT  TO  REVENUES;  RISK OF  LOSS.  Purchaser  will be
entitled  to all  VSI  collections  and  will  be  subject  to all  payment  and
disbursement  obligations and liabilities of VSI arising on and after 10:00 A.M.
on the Closing Date regardless of the actual time of the Closing.

                                    ARTICLE 2
                    REPRESENTATIONS AND WARRANTIES OF SELLERS

         Each of the  representations  and  warranties set forth herein shall be
separate and independent, and, except as expressly provided herein, shall not be
limited by reference to any other representation or warranty or anything else in
this  Agreement.  Sellers  individually  represent and warrant,  as provided for
herein, to Purchaser as follows:

         SECTION  2.01  OWNERSHIP.  Each Seller is, and at the Closing Date will
be, the sole record and  beneficial  owner of the number of shares of the Stock,
which are  represented  by the  certificates  bearing the numbers shown opposite
their names in Section  2.05.  Each Seller has and at the Closing Date will have
good and marketable  title to the shares of Stock  registered in his or its name
and the absolute  right to deliver such shares of Stock in  accordance  with the
terms of this Agreement,  free and clear of all Encumbrances.  The Stock is duly
authorized, validly issued, fully paid and nonassessable,  and was issued by VSI
in compliance with federal and state  securities laws. The transfer of the Stock
to Purchaser in accordance  with the terms of this  Agreement will transfer good
and  marketable  title  to  the  Stock  to  Purchaser  free  and  clear  of  all
Encumbrances, restrictions, and claims of every kind.

         SECTION 2.02 AUTHORITY;  Enforceability. Each Seller has the full legal
right,  power and authority to execute,  deliver and perform this  Agreement and
the  other   documents,   instruments   and   agreements   contemplated   hereby
(collectively,  the "TRANSACTION  DOCUMENTS") to which any Seller is a party, to
perform Sellers' obligations,  as applicable,  hereunder and thereunder, each in
accordance with its respective  terms, and to sell the Stock to Purchaser.  Each
of the  Transaction  Documents  to which  any  Seller  is a party  has been duly
authorized, executed and delivered by such Seller, or when executed will be duly
authorized,  executed  and  delivered  by such Seller and  constitutes,  or when
executed and delivered will constitute,  a valid and legally binding  obligation
of such  Seller,  enforceable  against  such  Seller in  accordance  with  their
respective  terms,  except as such  enforceability  may be limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium and similar laws affecting
creditors'  rights  generally  and  equitable  principles  which  may  limit the
availability of certain equitable

                                       7




remedies in certain instances.

         SECTION  2.03  ORGANIZATION;  AUTHORITY.  VSI  is  a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Louisiana. VSI is duly qualified and in good standing as a foreign entity in all
jurisdictions  in which the character of the  properties  owned or leased or the
nature of the  activities  conducted by it makes such  qualification  necessary.
Complete and correct copies of the Articles of Incorporation  and By-Laws of VSI
and all  amendments  thereto are set forth on Section  2.03(a) of the Disclosure
Letter.  VSI has all  requisite  power and authority to own or lease and operate
its  properties  and to carry on its business as such business is now conducted.
VSI was organized,  incorporated  and began  conducting  business in 1992,  and,
except as disclosed on Section 2.03(b) of the Disclosure  Letter, has been under
the same  management  and  ownership  since that time.  Except as  disclosed  on
Section 2.03 of the Disclosure Letter, neither Sellers nor VSI has ever operated
the business conducted by VSI under a fictitious name.

         SECTION 2.04  SUBSIDIARIES.  VSI has no subsidiaries,  owns or holds of
record  and/or  beneficially  no  shares  of any  class  in the  capital  of any
corporations, and owns no legal and/or beneficial interests in any partnerships,
limited liability  companies,  business trusts or joint ventures or in any other
unincorporated trade or business enterprises.

         SECTION  2.05  CAPITAL  STOCK.  The  authorized  capital  stock  of VSI
consists  exclusively  of five hundred ten (510) shares of Class A  (non-voting)
common stock,  no par value per share,  and four hundred  ninety (490) shares of
Class B (voting)  common stock,  no par value per share.  All of the  authorized
Stock has been issued,  is outstanding  and owned of record and  beneficially by
Sellers in the following amounts:

     SHAREHOLDER                  NO. OF SHARES                CERTIFICATE NO.
     -----------                  -------------                ---------------
Steven M. Rittvo                228.62 shares (Class A)              7
Ralph Capitelli                 140.69 shares (Class A)              5
T. Carey Wicker III             140.69 shares (Class A)              6
Louisiana Ventures, Inc.        490 shares (Class B)                 2

All of the authorized Class B shares are issued and outstanding and are owned by
LVI which is a subsidiary of Foreign Gaming Ventures, Inc., a Nevada corporation
which  is  a  subsidiary  of  Alliance  Gaming  Corporation  ("Alliance").   LVI
represents  and  warrants  that it has not created or granted,  and there are no
existing Encumbrances,  options,  warrants,  calls, purchase rights,  contracts,
commitments,  equities,  claims,  demands  or other  agreements  or rights  with
respect to the capital stock of VSI owned by LVI, except as disclosed on Section
2.05 of the  Disclosure  Letter  and there are no  convertible  or  exchangeable
securities of VSI outstanding which, upon conversion or exchange,  would require
the  issuance of any shares of capital  stock or other  securities  of VSI.  The
other Sellers  represent and warrant that they have not created or granted,  and
there are no existing Encumbrances,  options,  warrants, calls, purchase rights,
contracts, commitments,  equities, claims, demands or other agreements or rights
with respect to the capital stock of VSI held by such Sellers.

                                       8




         SECTION 2.06 TITLE TO STOCK,  LIENS,  ETC.  Sellers have, and as of the
consummation  of the Closing,  Purchaser  will have,  sole record and beneficial
ownership of all of the Stock,  free and clear of any  mortgage,  lien,  pledge,
charge,  security  interest,  Encumbrance,  title retention  agreement,  option,
equity or other adverse claim thereto.

         SECTION 2.07 CONSENTS AND APPROVALS;  CONFLICTS. Except as set forth in
Section  2.07 of the  Disclosure  Letter,  no filing  with or notice  to, and no
permit,  authorization,  consent  or  approval  of, any  Governmental  Entity is
necessary for the execution and delivery by Sellers of the Transaction Documents
or the  consummation by Sellers of the  transactions  contemplated  hereby.  The
execution  and  delivery  of  the  Transaction  Documents  by  Sellers  and  the
consummation of the  transactions  contemplated  hereby and thereby will not (a)
violate or conflict  with any  provision  of the  Articles of  Incorporation  or
By-Laws of VSI, each as amended to date; or (b) constitute a violation of, or be
in conflict with, or constitute or create a default under,  give rise to a right
of termination of, or accelerate the  performance  required by, or result in the
creation or imposition of any  Encumbrance  upon any property of VSI pursuant to
(i) any  agreement or  instrument to which VSI is a party or by which any of its
properties is bound, or (ii) any statute, judgment, decree, order, regulation or
rule of any court or governmental or regulatory authority. Neither the execution
and  delivery  of  this  Agreement  by  Sellers,  nor  the  consummation  of the
transactions  contemplated  hereby, will conflict with or result in a breach of,
or give  rise to a right  of  termination  of,  or  accelerate  the  performance
required by, any terms of any court order, consent decree, note, bond, mortgage,
indenture,  deed of trust,  Lease,  license,  loan  agreement,  the  articles of
incorporation  or bylaws of LVI or other  instrument  or  obligation  binding on
Sellers  or  VSI or to  which  any  Seller  or VSI is  subject  or a  party,  or
constitute a default  thereunder,  or result in the creation of any  Encumbrance
upon any of the assets of Sellers or VSI, except for any such conflict,  breach,
termination,  acceleration,  default  or  Encumbrance  which  would  not  have a
Material  Adverse Effect on (a) the business,  assets or financial  condition of
VSI or (b) Sellers' ability to consummate any of the  transactions  contemplated
hereby.

         SECTION  2.08  FINANCIAL  STATEMENTS.  LVI will  deliver the  following
financial  statements (the "FINANCIAL  STATEMENTS") to Purchaser,  and there are
attached as Section 2.08 of the Disclosure  Letter the audited balance sheets of
VSI as of June 30, 2004 (such  balance  sheet as of being  referred to herein as
the "BALANCE  SHEET"),  and the unaudited  balance sheet of VSI as of August 31,
2004 (such balance sheet as of being referred to herein as the "INTERIM  BALANCE
SHEET"),  the related audited statements of income and cash flows of VSI for the
fiscal year ended June 30, 2004 and the unaudited  statements of income and cash
flows for the period ended August 31, 2004.  LVI  represents  and warrants  that
each of the Financial  Statements  has been  prepared in  accordance  with GAAP,
consistently  applied,  is true and correct and has been  prepared  consistently
with  VSI's past  practices;  each such  balance  sheet  fairly  and  accurately
presents the  financial  condition of VSI as of its  respective  date;  and such
statements of income and cash flows fairly and accurately present the results of
operations for the periods covered thereby.

         SECTION 2.09 ABSENCE OF CERTAIN CHANGES. LVI represents and warrants
that

                                       9




except as set forth on Section 2.09 of the Disclosure  Letter,  since August 31,
2004, VSI has carried on its business only in the ordinary course, and there has
not been (a) any change in the assets, liabilities, sales, income or business of
VSI or in its  relationships  with suppliers,  customers or lessors,  other than
changes  which were both in the  ordinary  course of business and have not been,
either in any case or in the  aggregate,  materially  adverse;  (b) any  capital
expenditure,  capital  improvement  or  capital  addition  by VSI  which  in the
aggregate exceeds $25,000, or any other acquisition or disposition by VSI of any
asset or property other than in the ordinary course of business; (c) any damage,
destruction  or loss,  whether  or not  covered  by  insurance,  materially  and
adversely  affecting,  either in any case or in the  aggregate,  the property or
business of VSI; (d) any  declaration,  setting aside or payment of any dividend
or any other distributions in respect of the shares of the capital stock of VSI;
(e) any  issuance of any shares or option or right to acquire  shares of capital
stock of VSI or any direct or indirect redemption, purchase or other acquisition
of any of the Stock;  (f) any  increase  in the  compensation,  pension or other
benefits  payable  or to  become  payable  by VSI to  any  of  its  officers  or
employees,  or any bonus  payments or  arrangements  made to or with any of them
(other than pursuant to the terms of any existing  written  agreement or plan of
which the  Purchaser  has been supplied  complete and correct  copies);  (g) any
forgiveness  or  cancellation  of any debt or claim by VSI or any  waiver of any
right of material  value other than  compromises  of accounts  receivable in the
ordinary  course  of  business;  (h) any  entry  by VSI  into  any  contract  or
transaction other than in the ordinary course of business; (i) any incurrence by
VSI of any obligations or liabilities,  whether absolute, accrued, contingent or
otherwise (including, without limitation,  liabilities as guarantor or otherwise
with respect to obligations of others),  other than  obligations and liabilities
incurred in the ordinary  course of business;  (j) any mortgage,  pledge,  lien,
lease,  security  interest or other charge or  encumbrance on any of the assets,
tangible or intangible,  of VSI; (k) any discharge or satisfaction by VSI of any
lien or encumbrance,  or payment by VSI of any obligation or liability (fixed or
contingent) other than (i) current liabilities included in the Balance Sheet and
(ii) current  liabilities  incurred  since the date of the Balance  Sheet in the
ordinary  course  of  business,  or (l)  any  amendment  to  VSI's  articles  of
incorporation or bylaws.

         SECTION 2.10 LEGAL  PROCEEDINGS;  ETC. LVI represents and warrants that
except as set forth in Section 2.10 of the Disclosure  Letter, no action,  suit,
proceeding  or  investigation  is  pending  or, to LVI's  Knowledge,  threatened
against VSI or any Seller,  nor is there any basis  therefor  known to LVI.  The
other Sellers represent,  to such Seller's Knowledge,  there is no action, suit,
proceeding or  investigation  pending or threatened  against any Seller,  nor is
there any basis therefor known to such Sellers.

         SECTION 2.11  PERMITS;  COMPLIANCE  WITH LAWS. To the Knowledge of each
Seller,   (a)  VSI  has  all  necessary   permits,   licenses  and  governmental
authorizations  (collectively the "LICENSES") for the lease,  ownership,  use or
operations of its  properties  and assets and the carrying on of the business of
VSI as presently  conducted,  (b) VSI has conducted its business in  substantial
compliance  with and is in  substantial  compliance  with all  Applicable  Laws,
regulations,   orders,  permits,   judgments,   ordinances  or  decrees  of  all
Governmental   Entities  having   jurisdiction  over  VSI  and/or  its  business
operations,  (c)  there  are  no  inquiries,   pending  or  threatened,  by  any
Governmental Entity

                                       10




that would have a Material Adverse Effect, (d) there will be no Material Adverse
Effect as a result of the transactions hereunder or contemplated hereby, and (e)
true and complete  copies of such licenses  have  previously  been  delivered to
Purchaser.

         SECTION 2.12 TITLE TO PROPERTY; CONDITION OF PROPERTY; REAL PROPERTY
LEASES, ETC. LVI represents and warrants that:

         (a) Except as set forth in Section  2.12(a) of the  Disclosure  Letter,
VSI  has  good  and  marketable  title  to  all of its  properties  and  assets,
including,  without limitation, all those reflected in the Balance Sheet (except
for properties or assets sold or otherwise disposed of in the ordinary course of
business since the date of the Balance Sheet),  all free and clear of all liens,
pledges, charges, security interests, Encumbrances or title retention agreements
of any kind or nature.

         (b) Section 2.12(b) of the Disclosure  Letter sets forth a complete and
correct  list of the  following  personal  property  of VSI:  machinery,  tools,
computers  and  related  software,  office  equipment,  furnishings,   vehicles,
inventory,  spare parts,  any fixtures  attached to real property leased to VSI,
and any other tangible personal property (collectively,  the "TANGIBLE ASSETs").
All of the Tangible  Assets are available for use in VSI's  business  except for
those  items being  serviced  in the  ordinary  course of  business.  All of the
Tangible Assets and the state of maintenance  thereof are in compliance with all
Applicable  Laws,  statutes,  ordinances,  rules and  regulations.  The Tangible
Assets  include all assets and  properties  that are  necessary to conduct VSI's
business  as it is now  being  conducted.  The  spare  parts  are  usable in the
ordinary  course of business  and the value of the spare  parts  included in the
Tangible  Assets at the close of business on the Closing  Date shall be at least
as much as the  value  of the  spare  parts  shown  on  Section  2.12(b)  of the
Disclosure Letter.

         (c) Section  2.12(c) of the Disclosure  Letter sets forth by location a
complete listing by serial number of all video poker gaming devices owned by VSI
(the  "Devices").  All of the  Devices  are  owned by VSI free and  clear of any
Encumbrance, and are duly licensed and registered with the State of Louisiana.

         (d) Section 2.12(d) of the Disclosure  Letter sets forth a complete and
correct  description  of all  Leases,  including  but not  limited  to, all real
property  leased to VSI and all leases of real property to which VSI is a party.
Complete and correct copies of all such Leases have been delivered to Purchaser.
Each such Lease is valid and subsisting  and no event or condition  exists which
constitutes,  or  after  notice  or lapse of time or both  would  constitute,  a
default  thereunder.  The  leasehold  interests of VSI are subject to no lien or
other  encumbrance,  and VSI is in quiet possession of the properties covered by
such Leases.  Neither any Seller nor VSI has received any notice that either the
whole  or  any  portion  of  such  leased  real  property  is to  be  condemned,
requisitioned or otherwise taken by any public authority. Neither any Seller nor
VSI has any  Knowledge  of any  public  improvements  that may result in special
assessments  against or otherwise  affect any of such leased real property.  VSI
does not presently own and has never owned any real property.

                                       11




         SECTION 2.13 ENVIRONMENTAL MATTERS. LVI and, to their Knowledge,  other
Sellers  represent  and warrant  that except as set forth on Section 2.13 of the
Disclosure Letter:

         (a) VSI is not in  violation  of nor is there any alleged  violation of
any judgment,  decree,  order,  law, license,  rule or regulation  pertaining to
environmental  matters,  including  without  limitation  those arising under any
federal, state or local statute, regulation, ordinance, order or decree relating
to health, safety or the environment (hereinafter "ENVIRONMENTAL LAWS");

         (b) Neither  Sellers nor VSI has received  notice from any third party,
including without limitation any federal, state or local governmental authority,
(i) that VSI has been identified by the United States  Environmental  Protection
Agency as a potentially responsible party under the Comprehensive  Environmental
Response,  Compensation  and  Liability  Act of 1980 as amended  (CERCLA),  with
respect to a site listed on the National  Priorities  List,  40 C.F.R.  Part 300
Appendix  B (1986);  (ii) that any  hazardous  waste,  as  defined  by 42 U.S.C.
ss.6903(5),  any hazardous  substance as defined by 42 U.S.C.  ss.9601(14),  any
pollutant  or  contaminant  as  defined  by 42 U.S.C.  ss.9601(33)  or any toxic
substance,  oil or hazardous material or other chemical or substance (including,
without  limitation,  asbestos in any form, urea formaldehyde or polychlorinated
biphenyls)  regulated by any Environmental  Laws ("HAZARDOUS  SUBSTANCES") which
VSI has  generated,  transported  or  disposed  of has been found at any site at
which a federal, state or local agency or other third party has conducted or has
ordered  that VSI conduct a remedial  investigation,  removal or other  response
action  pursuant  to any  Environmental  Law; or (iii) that VSI is or shall be a
named party to any claim,  action,  cause of action,  complaint,  (contingent or
otherwise) legal or administrative  proceeding  arising out of any third party's
incurrence  of costs,  expenses,  losses or  damages of any kind  whatsoever  in
connection with the release of Hazardous Substances;

         (c) (i) No portion of any real property,  leased or operated by VSI has
been  used  by VSI for  the  handling,  manufacturing,  processing,  storage  or
disposal  of  Hazardous   Substances   except  in  accordance   with  applicable
Environmental  Laws;  (ii) in the course of any activities  conducted by VSI, no
Hazardous  Substances have been generated or are being used on any real property
leased or operated by VSI except in  accordance  with  applicable  Environmental
Laws;  (iii)  all real  properties  leased  or  operated  by VSI are  free  from
contamination  of  every  kind  through  activities  of VSI,  including  without
limitation,  groundwater,  surface water, soil,  sediment and air contamination,
and such properties do not contain any Hazardous Substances; and (iv) there have
been no  releases  (i.e.,  any past or  present  releasing,  spilling,  leaking,
pumping,  pouring,  emitting,  emptying,   discharging,   injecting,   escaping,
disposing or dumping) or threatened  releases of Hazardous  Substances on, upon,
into or from any real  property  leased or operated by VSI except in  accordance
with applicable Environmental Laws.

         SECTION 2.14  INSURANCE.  LVI represents and warrants that Section 2.14
of the  Disclosure  Letter  lists all  policies  of fire,  liability,  workmen's
compensation,  life,  property and casualty and other insurance owned or held by
VSI.  Such  policies  of  insurance  are  maintained,  to the  best of  Sellers'
Knowledge,  with financially sound and reputable

                                       12




insurance companies, funds or underwriters,  and are of the kinds and cover such
risks and are in such amounts and with such  deductibles  and  exclusions as are
consistent  with prudent  business  practice.  All such policies (a) are in full
force and effect, (b) are sufficient for compliance by VSI with all requirements
of law and all  agreements  to which VSI is a party,  (c) provide that they will
remain in full force and effect  until the Closing  Date.  VSI is not in default
with respect to its obligations under any of such insurance policies and has not
received any  notification of cancellation  of any such insurance  policies.  No
insurance  carrier has denied coverage for any claim asserted by VSI in the past
five years,  nor has any insurance  carrier  declined to provide any coverage to
VSI in the past five years.

         SECTION 2.15  CONTRACTS.  LVI represents and warrants that Section 2.15
of the  Disclosure  Letter sets forth a complete  and  accurate  list of (i) all
material lease, maintenance,  repair and service contracts and agreements of VSI
with  customers  (collectively,  the "CUSTOMER  CONTRACTS"),  and (ii) all other
contracts  to which VSI is a party or by or to which it or any of its  assets or
properties  is  bound or  subject  (collectively,  the  "OTHER  CONTRACTS"  and,
collectively  with the Customer  Contracts,  the  "CONTRACTS").  As used in this
Section 2.15, the word "CONTRACT" means and includes every material agreement or
understanding of any kind,  written or oral, which is legally  enforceable by or
against VSI, and specifically  includes (a) equipment leases; (b) telephone book
listing  agreements;  (c)  non-competition,  non-solicitation  or non-disclosure
agreements;  (d) manufacturers' warranties on tangible property; (e) cost sheets
and bills of materials;  (f) contracts and other  agreements with any current or
former   officer,   director,   employee,   consultant  or  shareholder  or  any
partnership,  corporation,  joint  venture or any other entity in which any such
Person has an interest;  (g) bonds or other security  agreements provided by any
party in connection with the business of VSI; (h) contracts and other agreements
for the sale of any  assets  or  properties  of VSI other  than in the  ordinary
course of business or for the grant to any Person of any preferential  rights to
purchase any of such assets or  properties;  (i)  contracts or other  agreements
under which VSI agrees to indemnify  any Person or to share Tax liability of any
Person;  (j) any contracts or other agreements with regard to Indebtedness;  (k)
contract to provide vision and dental  coverage for employees of VSI; or (l) any
other contract or other agreement  whether or not made in the ordinary course of
business.  Sellers have delivered to Purchaser true, correct and complete copies
of all  of the  Contracts,  together  with  all  modifications  and  supplements
thereto.  Each of the contracts listed on Section 2.15 of the Disclosure  Letter
or any of the other  Sections  of the  Disclosure  Letter  is in full  force and
effect, VSI is not in breach of any of the provisions of any such contract, and,
to the  Knowledge of Sellers,  no other party to any such contract is in default
thereunder,  nor does any event or  condition  exist  which  with  notice or the
passage of time or both would  constitute a default  thereunder.  VSI has in all
material  respects  performed all obligations  required to be performed by it to
date under each such contract. No approval or consent of any Person is needed in
order that the  contracts  listed on Section 2.15 of the  Disclosure  Letter and
other  Sections  of the  Disclosure  Letter  continue  in full  force and effect
following the consummation of the  transactions  contemplated by this Agreement,
and no such  contract  includes  any  provision  the  effect  of which may be to
enlarge or accelerate  any  obligations  of VSI  thereunder  or give  additional
rights to any other party  thereto or will in any other

                                       13




way be  affected  by, or  terminate  or lapse by  reason  of,  the  transactions
contemplated  by this Agreement.  VSI is not a party to any franchise,  license,
distributor or other similar type of contract or agreement.  VSI is not party to
any contract or instrument nor subject to any  restriction  which now has or, to
the best of  Sellers'  Knowledge  may have,  an  adverse  effect,  financial  or
otherwise, upon VSI or its assets.

         SECTION 2.16  EMPLOYEES.  LVI represents and warrants that Section 2.16
of the  Disclosure  Letter sets forth the name,  title and current annual salary
and other compensation payable by VSI to each employee of VSI.

         SECTION 2.17  EMPLOYEE BENEFIT PLANS. LVI represents and warrants that:

         (a) except  for the  arrangements  set forth on Section  2.17(a) of the
Disclosure  Letter,  VSI does not now maintain or contribute  to, and has not in
the current or preceding six (6) calendar years  maintained or  contributed  to,
any employee  benefit plan or pension,  profit-sharing,  deferred  compensation,
bonus, stock option,  share appreciation right,  severance,  group or individual
health,  dental,  medical,  life insurance,  survivor benefit,  or similar plan,
agreement,  understanding,  practice,  policy or arrangement,  whether formal or
informal,  for the benefit of any  director,  officer,  consultant  or employee,
whether  active or  terminated,  of VSI. Each of the  arrangements  set forth on
Section  2.17(a)  of the  Disclosure  Letter is  hereinafter  referred  to as an
"EMPLOYEE   BENEFIT  PLAN",   except  that  any  such  arrangement  which  is  a
multi-employer  plan  shall be  treated  as an  Employee  Benefit  Plan only for
purposes of Sections 2.17(d)(iv), (vi) and (viii) and 2.17(g) below.

         (b) LVI  has  heretofore  delivered  to  Purchaser  true,  correct  and
complete  copies of each Employee  Benefit Plan of VSI, and with respect to each
such Employee  Benefit Plan (i) any associated  trust,  custodial,  insurance or
service  agreements,  (ii) any annual report,  actuarial  report,  or disclosure
materials  (including  specifically any summary plan descriptions)  submitted to
any  governmental   agency  or  distributed  to  participants  or  beneficiaries
thereunder  in the current or any of the six (6)  preceding  calendar  years and
(iii) the most recently received IRS determination  letters and any governmental
advisory opinions or rulings.

         (c) Each Employee  Benefit Plan is and has heretofore  been  maintained
and operated in substantial  compliance with the terms of such Employee  Benefit
Plan and with the  requirements  prescribed  (whether as a matter of substantive
law or as necessary to secure  favorable tax treatment) by any and all statutes,
governmental  or court orders,  or  governmental  rules or regulations in effect
from time to time,  including but not limited to the Employee  Retirement Income
Security Act of 1974,  as amended  ("ERISA")  and the  Internal  Revenue Code of
1986, as amended  ("CODE") and  applicable to such Employee  Benefit Plan.  Each
Employee  Benefit Plan which is intended to qualify under Section  401(a) of the
Code has received a favorable  determination letter from the IRS and nothing has
occurred since the date of the last such determination  which has resulted or is
likely to result in the revocation of such  determination.  VSI is in compliance
with the  continuation  coverage  provisions  of Part 6 of Title I of ERISA  and
Section 4980B of the Code.

                                       14




         (d) Except as set forth on Section 2.17(d) of the Disclosure Letter,

                  (i)      there  is no  pending  or  threatened  legal  action,
                           proceeding  or  investigation,   other  than  routine
                           claims for benefits,  concerning any Employee Benefit
                           Plan  or,  to the  best  Knowledge  of  Sellers,  any
                           fiduciary  or service  provider  thereof  and, to the
                           best Knowledge of Sellers,  there is no basis for any
                           such legal action, proceeding or investigation;

                  (ii)     no liability (contingent or otherwise) to the Pension
                           Benefit   Guaranty   Corporation   ("PBGC")   or  any
                           multi-employer  plan has been  incurred by either VSI
                           or any affiliate thereof;

                  (iii)    no  reportable  event,  or event or  condition  which
                           presents a material risk of  termination by the PBGC,
                           has occurred  with  respect to any  Employee  Benefit
                           Plan, or any retirement  Employee  Benefit Plan of an
                           affiliate  of VSI,  which is  subject  to Title IV of
                           ERISA;

                  (iv)     no Employee  Benefit Plan,  nor to the best Knowledge
                           of LVI,  any  party in  interest  or  fiduciary  with
                           respect   thereof,   has  engaged  in  a   prohibited
                           transaction  which  could  subject  VSI  directly  or
                           indirectly  to any material  liability  under Section
                           409 or 502(i) of ERISA or Section 4975 of the Code;

                  (v)      no communication,  report or disclosure has been made
                           which,  at the time made, did not accurately  reflect
                           the  terms and  operations  of any  Employee  Benefit
                           Plan;

                  (vi)     no Employee  Benefit Plan provides  welfare  benefits
                           subsequent to  termination of employment to employees
                           or their beneficiaries (except to the extent required
                           by applicable  state insurance laws and Title I, Part
                           6 of ERISA)  except as required  to obtain  favorable
                           tax treatment therefor;  provided,  however, that any
                           contribution   required   for  such   favorable   tax
                           treatment  for any period  through the  Closing  Date
                           shall be considered  part of the  Indebtedness of VSI
                           as of the Closing which  Purchasers  are obligated to
                           discharge;

                  (vii)    no benefits due under any Employee  Benefit Plan have
                           been   forfeited   subject  to  the   possibility  of
                           reinstatement (which possibility would still exist at
                           or after Closing)  except to the extent of immaterial
                           amounts as may be required under Section 411(a)(7)(C)
                           of the Code; and

                  (viii)   VSI has  not  undertaken  to  maintain  any  Employee
                           Benefit  Plan for any  period  of time and each  such
                           Employee  Benefit Plan is terminable  with respect to
                           employees  of  VSI  at  the  sole  discretion  of VSI
                           without  vesting  or  acceleration  of any  benefits,
                           except vesting

                                       15




                           required under Section 411(a)(3) of the Code.

         (e) With  respect to each  Employee  Benefit  Plan for which a separate
fund of assets is maintained, full payment has been made of all amounts that VSI
is required, under the terms of each such Employee Benefit Plan, to have paid as
contributions  to that Employee  Benefit Plan as of the end of the most recently
ended plan year or plan quarter,  if applicable,  of that Employee Benefit Plan,
and no  accumulated  funding  deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any such
Employee  Benefit  Plan.  Except as shown on Section  2.17(e) of the  Disclosure
Letter,  the current  value of the assets of each such funded  Employee  Benefit
Plan,  as of the end of the  most  recently  ended  plan  year of that  Employee
Benefit Plan equaled or exceeded the current value of all accrued benefits under
that Employee Benefit Plan; PROVIDED,  HOWEVER, that any employer  contributions
shown on Section 2.17(e) of the Disclosure Letter or otherwise required in order
to maintain the favorable tax  qualification  of such Employee  Benefit Plan for
any plan year  ending on or before  the  Closing  Date or, in the case of a plan
year ending  after the Closing  Date,  that portion of the plan year through the
Closing  Date  shall be  considered  part of the  Indebtedness  of VSI as of the
Closing which  Purchasers  are  obligated to discharge  unless such amounts have
been paid as of the Closing Date;

         (f)  The  execution  of this  Agreement  and  the  consummation  of the
transactions  contemplated  hereby  will not result in any  payment  (whether of
severance pay or otherwise)  becoming due from any Employee  Benefit Plan to any
current or former director,  officer, consultant or employee of VSI or result in
the vesting (except as may be required by Section 411 of the Code), acceleration
of payment or increases in the amount of any benefit payable to or in respect of
any such current or former director, officer, consultant or employee.

         (g) No Employee Benefit Plan is a multi-employer  plan, and no Employee
Benefit Plan is subject to any funding  standard  under  Section 302 of ERISA or
Section 412 of the Code.

         (h) For  purposes  of  this  Section  2.17,  "employee  benefit  plan",
"multi-employer  plan",  "party  in  interest",  "fiduciary",  "current  value",
"accrued  benefit",  "reportable  event" and "benefit  liability"  have the same
meaning  assigned such terms under Sections 3, 4043(b) or 4001(a) of ERISA,  and
"affiliate" means any entity which under Section 414 of the Code is treated as a
single employer with VSI or any entity which under Section  4001(a)(14) of ERISA
is treated as under common control with VSI.

         SECTION 2.18 LABOR RELATIONS. LVI represents and warrants that, (a) VSI
is in  compliance  in all  material  respects,  with all  federal and state laws
respecting  employment  and  employment  practices,   terms  and  conditions  of
employment,  wages and hours and  nondiscrimination  in  employment,  and is not
engaged in any unfair  labor  practice,  (b) there is no charge  pending  or, to
LVI's Knowledge,  threatened  against VSI alleging  unlawful  discrimination  in
employment  practices  before  any court or agency  and there is no charge of or
proceeding  with regard to any unfair labor practice  against VSI pending

                                       16




before  the  National  Labor  Relations  Board,  (c)  there is no labor  strike,
dispute,  slow-down  or work  stoppage  actually  pending or to LVI's  Knowledge
threatened against or involving VSI, (d) none of the employees of VSI is covered
by any collective bargaining  agreement,  and no collective bargaining agreement
is currently  being  negotiated by VSI and (e) VSI has not  experienced any work
stoppage during the last five years.

         SECTION 2.19  POTENTIAL  CONFLICTS OF INTEREST.  Except as set forth on
Section 2.19 of the Disclosure  Letter,  no officer,  director or stockholder of
VSI (a) owns,  directly or indirectly,  any interest in (excepting not more than
5% stock  holdings for  investment  purposes in  securities of publicly held and
traded  companies)  or is an officer,  director,  employee or  consultant of any
Person which is a competitor,  lessor, lessee,  customer or supplier of VSI; (b)
owns,  directly or  indirectly,  in whole or in part, any tangible or intangible
property which VSI is using or the use of which is necessary for the business of
VSI; or (c) has any cause of action or other claim whatsoever  against,  or owes
any amount to, VSI, except for claims in the ordinary  course of business,  such
as for accrued  vacation pay,  accrued benefits under Employee Benefit Plans and
similar matters and agreements.

         SECTION 2.20 PATENTS, TRADEMARKS, ETC. LVI represents and warrants that
Section 2.20 of the Disclosure  Letter hereto sets forth a complete and accurate
list of (a) all patents,  trademarks,  trade names and copyrights  registered in
the  name of VSI or  used or  proposed  to be  used  by  VSI,  all  applications
therefor,  and all  licenses  (as  licensee or  licensor)  and other  agreements
relating  thereto,  and (b) all material  written  agreements  relating to other
technology, know-how and processes which VSI is licensed or authorized by others
to use or which VSI has licensed or authorized for use by others.  Except to the
extent set forth in Section 2.20 of the Disclosure  Letter,  VSI owns or has the
right to use all patents,  trademarks,  trade names and copyrights,  and has the
right to use all technology,  know-how and processes,  used or necessary for the
ordinary course of business as presently  conducted or proposed to be conducted,
and the consummation of the transactions  contemplated  hereby will not alter or
impair any such right. To LVI's Knowledge, (a) no claims have been asserted, and
no claims are  pending,  by any Person  regarding  the use of any such  patents,
trademarks,  trade names,  copyrights,  technology,  know-how or  processes,  or
challenging  or  questioning  the  validity or  effectiveness  of any license or
agreement,  and there is no basis for such  claim and (b) the use by VSI of such
patents, trademarks, trade names, copyrights,  technology, know-how or processes
in the  ordinary  course of  business  does not  infringe  on the  rights of any
Person.

         SECTION 2.21 ACCOUNTS RECEIVABLE.  LVI represents and warrants that all
accounts and notes receivable reflected on the Interim Balance Sheet have arisen
in the ordinary course of business, represent valid obligations owing to VSI and
have been collected or are in line for collection the aggregate recorded amounts
thereof in  accordance  with their  terms,  net of the reserve  for  uncollected
accounts set forth on the Interim Balance Sheet.

         SECTION 2.22  TAXES.

                                       17




         (a) VSI and VSI  Group  have  filed  all Tax  Returns  that  they  were
required to file.  All such Tax Returns  are true,  correct and  complete in all
material  respects.  All Taxes owed by VSI and/or the VSI Group  (whether or not
shown on any Tax  Return)  have  been  paid.  Neither  VSI nor the VSI Group are
currently  the  beneficiaries  of any extension of time within which to file any
Tax Return.  No claims  have ever been made by an  authority  in a  jurisdiction
where VSI and or the VSI Group  has not or does not file Tax  Returns  that they
may be subject to taxation by that jurisdiction. There are no security interests
or liens on any of the  assets of either VSI or any member of the VSI Group that
arose in connections with the failure (or alleged failure) to pay any Tax.

         (b) VSI and the VSI Group have withheld and paid all Taxes  required to
have been  withheld  and paid in  connection  with  amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.

         (c) No director or officer (or employee responsible for Tax matters) of
any of VSI and the VSI Group expect any authority to assess any additional Taxes
for any period for which Tax  Returns  have been  filed.  There is no dispute or
claim concerning any Tax liability of VSI or the VSI Group either (A) claimed or
raised by any  authority in writing or (b) as to which any of the  directors and
officers (and employees responsible for Tax matters) of VSI or the VSI Group had
knowledge based upon personal contact with any agent of such authority.  Section
2.22(c) of the Disclosure  Letter lists all federal,  state,  local, and foreign
income  Tax  Returns  filed with  respect  to VSI and the VSI Group for  taxable
periods ended on or after January 1, 1998, indicates those Tax Returns that have
been  audited,  and  indicates  those Tax Returns that are the subject of audit.
Sellers  have  delivered  to Buyer  correct and  complete  copies of all federal
income Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by any of VSI and the VSI Group since January 1, 1998.

         (d) None of VSI and the VSI Group has waived any statues of limitations
in respect of Taxes or agreed to any  extension  of time with respect to any Tax
assessment or deficiency.

         (e) Neither VSI nor the VSI Group has made any  payments,  if obligated
to make  any  payments,  or is a  party  to any  agreement  that  under  certain
circumstances could obligate it to make any payments that will not be deductible
under Code ss. 280G. Neither VSI nor the VSI Group has been a United States real
property holding corporation within the meaning of Code ss. 897(c)(2) during the
applicable period specified in Code ss. 897(c)(1)(A)(ii).  VSI and the VSI Group
have  disclosed on their  Federal Tax Return all  positions  taken  therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Code ss.  6666.  Neither  VSI nor the VSI Group is a party to any Tax
allocation  or sharing  agreement.  Neither VSI nor the VSI Group (i) has been a
member of an affiliated  group filing a  consolidated  federal income Tax Return
(other than a group the common  parent of which was the parent of the VSI Group)
or (ii) has any  liability  for the

                                       18




Taxes of any person or entity (other than under Reg ss.  1.1502-6 or any similar
provision of state,  local or foreign  law),  as  transferee  or  successor,  by
contract, or otherwise.

         (f) Section  2.22(f) of the Disclosure  Letter sets forth the following
information (with respect to each as of the most recent  practicable  date): (i)
the basis of each of VSI's assets;  (ii) the amount of any net  operating  loss,
net capital loss,  unused  investment or other  credit,  unused  foreign tax, or
excess  charitable  contribution  allocable  to VSI; and (iii) the amount of any
deferred  gain or loss  allocable to VSI or any member of the VSI Group  arising
out of any deferred intercompany transactions.

         (g) The  unpaid  Taxes of VSI and the VSI Group (i) did not,  as of the
most recent fiscal month end,  exceed the reserve for Tax liability  (other than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax  income)  set forth on the face of the most  recent  balance  sheet
(rather  than in any notes  thereto)  and (ii) do not  exceed  that  reserve  as
adjusted for the passage of time through the Closing date in accordance with the
past custom and practice of VSI and the VSI Group.

         SECTION 2.23 INDEBTEDNESS. LVI represents and warrants that (a) Section
2.23(a) of the Disclosure Letter sets forth a true, complete and correct list of
each of the  creditors  of VSI as of the date hereof and the amount due from VSI
to each creditor,  (b) except for  Indebtedness  described on Section 2.23(a) of
the Disclosure Letter,  VSI has no Indebtedness  outstanding at the date hereof,
(c) VSI is not in material default with respect to any outstanding  Indebtedness
or any instrument relating thereto and no such Indebtedness or any instrument or
agreement  relating  thereto purports to limit the issuance of any securities by
VSI or  the  operation  of the  business  of  VSI  and  (d)  VSI  will  have  no
Indebtedness  outstanding  as of 10:00 A.M. on the Closing  Date.  Complete  and
correct  copies  of all  instruments  (including  all  amendments,  supplements,
waivers and consents) relating to any Indebtedness of VSI have been furnished to
Purchaser by LVI.

         SECTION 2.24 OFFICERS AND DIRECTORS, BANK ACCOUNTS,  SIGNING AUTHORITY,
POWERS OF ATTORNEY.  LVI  represents  and  warrants  that except as set forth on
Section  2.24(a) of the Disclosure  Letter,  VSI has no accounts or safe deposit
boxes in any bank and no Person has any power,  whether  singly or  jointly,  to
sign any checks on behalf of VSI, to withdraw any money or other  property  from
any  bank,  brokerage  or other  account  of VSI or to act  under  any  power of
attorney granted by VSI at any time for any purpose. LVI represents and warrants
that Section  2.24(b) of the Disclosure  Letter also sets forth the names of (a)
all  incumbent  officers and  directors of VSI,  (b) all persons  authorized  to
borrow money or sign notes on behalf of VSI and (c) all persons  holding  credit
cards of VSI (and specifying the issuer of the card and the card number).

         SECTION 2.25 MINUTE BOOKS, ETC. LVI represents and warrants that except
as set forth on Section 2.25 of the Disclosure  Letter,  the minute books of VSI
made available to

                                       19




Purchaser  for  inspection  accurately  record  therein all actions taken by the
Board  of  Directors  and  shareholders  of VSI.  The  stock  books  of VSI made
available to Purchaser or inspection are true, correct and complete.

         SECTION  2.26  BROKER.  Sellers  have not  retained,  utilized  or been
represented by any broker,  agent, finder or intermediary in connection with the
negotiation or consummation of the transactions contemplated by this Agreement.

         SECTION  2.27   ACCURACY  OF   REPRESENTATIONS   AND   WARRANTIES.   No
representation  or  warranty by Sellers in this  Agreement  or in any exhibit or
section to the Disclosure  Letter contains or will contain any untrue  statement
of a material fact.

         SECTION 2.28  EFFECTIVENESS OF REPRESENTATIONS  AND WARRANTIES.  All of
the representations and warranties of Sellers in this Agreement shall be true in
all  material  respects  at  Closing  Date and shall be deemed to have been made
again by Sellers on and as of the Closing Date.

                                    ARTICLE 3
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         Purchaser  represents  and warrants to Sellers that the  statements  in
this  Article 3 are correct and  complete as of the date of this  Agreement  and
will be correct and complete as of the Closing Date.

         SECTION  3.01  ORGANIZATION  OF  PURCHASER.   Purchaser  is  a  limited
liability  company,  validly existing and in good standing under the laws of the
State of  Louisiana,  having  all  requisite  powers  and  authority  to own its
property and to carry on its business as it is now being conducted.

         SECTION 3.02  AUTHORITY;  ENFORCEABILITY.  Purchaser has the full legal
right,  power and authority to execute,  deliver and perform this  Agreement and
the  Transaction  Documents  to which  Purchaser  is a party,  to perform all of
Purchaser's  obligations  hereunder and thereunder,  each in accordance with its
respective  terms.  Each of the  Transaction  Documents to which  Purchaser is a
party has been duly executed and  delivered by Purchaser,  or when executed will
be duly executed and delivered by Purchaser  and  constitutes,  or when executed
and  delivered  will  constitute  a valid  and  legally  binding  obligation  of
Purchaser,  enforceable  against  Purchaser in accordance with their  respective
terms,  except as such  enforceability may be limited by applicable  bankruptcy,
insolvency,  reorganization,  moratorium and similar laws  affecting  creditors'
rights  generally  and  equitable  principles  which may limit the  available of
certain equitable remedies in certain instances.

         SECTION  3.03  CONSENTS  AND  APPROVALS;  CONFLICTS.  No filing with or
notice  to,  and  no  permit,   authorization,   consent  or  approval  of,  any
Governmental  Entity is necessary for the execution and delivery by Purchaser of
this Agreement or the consummation by Purchaser of the transactions contemplated
hereby.  Neither the execution and delivery of this Agreement by Purchaser,  nor
the consummation of the

                                       20




transactions  contemplated  hereby,  will violate any of the  provisions  of the
Articles of Organization or Operating  Agreement of Purchaser;  or conflict with
or  result  in a breach  of,  or give  rise to a right  of  termination  of,  or
accelerate the  performance  required by, any terms of any court order,  consent
decree, note, bond, mortgage,  indenture,  deed of trust, Lease,  license,  loan
agreement or other  instrument  or  obligation  binding on Purchaser or to which
Purchaser is subject or a party, or constitute a default  thereunder,  or result
in the creation of any Encumbrance  upon any of the assets of Purchaser,  except
for any such conflict, breach, termination, acceleration, default or Encumbrance
which would not have a Material  Adverse  Effect on (a) the business,  assets or
financial condition of Purchaser or (b) Purchaser's ability to consummate any of
the transactions contemplated hereby.

         SECTION 3.04 INVESTMENT  REPRESENTATION.  Purchaser,  together with its
attorneys, accountants and other advisors, possess such Knowledge and experience
in financial  matters and in matters  pertaining  to video poker gaming as to be
able to evaluate the merits and risks of the purchase of the Stock from Sellers.

         SECTION  3.05  NO  REPRESENTATIONS  AND  WARRANTIES;   CONDUCT  OF  DUE
DILIGENCE. Other than the express representations and warranties,  covenants and
agreements  made by  Sellers  in this  Agreement  and  any of the  exhibits  and
schedules hereto, none of the Sellers,  nor any person or entity acting by or on
behalf of any of the Sellers has made any representation,  warranty, inducement,
promise,  agreement,  assurance or  statement,  oral or written,  of any kind to
Purchaser in this  Agreement or  elsewhere,  upon which  Purchaser is relying in
entering into this Agreement and the transactions contemplated hereby. Purchaser
has conducted such  investigation  and  inspection of the business,  operations,
assets and liabilities,  results of operations and financial condition of VSI as
Purchaser may have deemed  necessary or appropriate  for the purpose of entering
into this Agreement and the transactions  contemplated hereby. In executing this
Agreement,  Purchaser  is relying only on its own  investigation  of VSI and the
accuracy of the express representations and warranties, covenants and agreements
made  by  Sellers  in  the   Transaction   Documents,   and  not  on  any  other
representations,  warranties,  inducements,  promises,  agreements,  assurances,
omissions or statements of any kind or nature.

         SECTION 3.06 BROKERAGE  FEES. No Person is entitled to any brokerage or
finder's fee or other  commission from Purchaser in respect of this Agreement or
the transactions contemplated hereby.

         SECTION 3.07 SECURITIES ACT REPRESENTATIONS. Purchaser is acquiring the
Stock for  investment  for its own account,  not as a nominee or agent,  and not
with a view to the resale or  distribution  of any part  thereof in violation of
the Securities Act of 1933, as amended (the  "SECURITIES  ACT").  Purchaser does
not have any present  intention of selling,  granting any  participation  in, or
otherwise  distributing any of the Stock otherwise than pursuant to an effective
registration  statement under the Securities Act or in a transaction exempt from
the  registration  requirements  under the Securities  Act and applicable  state
securities laws. Purchaser does not have any contract, undertaking, agreement or
arrangement with any person to sell,  transfer or grant  participations  to such
person or to any third person, with respect to any of the Stock.

                                       21




         SECTION 3.08  EFFECTIVENESS OF REPRESENTATIONS  AND WARRANTIES.  All of
the  representations and warranties of Purchaser in this Agreement shall be true
in all  respects on the Closing Date and shall be deemed to have been made again
by Purchaser on and as of the Closing Date.

                                    ARTICLE 4
                              PRE-CLOSING COVENANTS

         SECTION 4.01 LEGAL REQUIREMENTS. Subject to the conditions set forth in
Article 5 and to the other terms and provisions of this  Agreement,  each of the
Parties to this Agreement  agrees to take, or cause to be taken,  all reasonable
actions necessary to comply promptly with all legal  requirements  applicable to
it with respect to the  transactions  contemplated  by this  Agreement  and will
promptly cooperate with and furnish information to each other in connection with
any such requirements  imposed upon any of them. Purchaser and Sellers will take
all reasonable  actions necessary to obtain,  and will cooperate with each other
in obtaining, any consent, authorization, order or approval of, or any exemption
by, any  Governmental  Entity or other public or private  party,  required to be
obtained  or  made  by it or the  taking  of any  action  contemplated  by  this
Agreement.

         SECTION 4.02 ACCESS TO PROPERTIES AND RECORDS.  Until the Closing Date,
Sellers shall cause VSI to allow  Purchaser and its  authorized  representatives
reasonable  access,  during normal business hours and on reasonable  notice,  to
VSI's  properties,  offices,  vehicles,  equipment,  inventory and other assets,
documents,  files, books and records,  contracts and other documents in order to
allow Purchaser a full opportunity to make such  investigation and inspection as
it desires of VSI's business and assets.  Sellers shall further cause VSI to use
reasonable  efforts to cause the  employees,  counsel  and  regular  independent
certified  public  accountants of VSI to be available upon reasonable  notice to
answer questions of VSI's representatives concerning the business and affairs of
VSI, and shall further use  reasonable  efforts to cause them to make  available
all  relevant  books  and  records  in  connection   with  such  inspection  and
examination,  including  without  limitation,  work  papers  for all  audits and
reviews  of  financial   statements  of  VSI.  Purchaser  shall  be  subject  to
confidentiality provisions of Article 9.

         SECTION 4.03 CONDUCT OF BUSINESS.  LVI covenants and agrees that,  from
and after the date of this Agreement and until the Closing,  except as otherwise
specifically consented to or approved by Purchaser in writing:

         (a) Carry on in Regular Course. Sellers shall cause VSI to maintain its
owned and leased properties in good operating  condition and repair, and to make
all necessary  renewals,  additions and  replacements  thereto,  to carry on its
business  diligently and  substantially in the same manner as heretofore and not
make or institute any unusual or novel methods of manufacture,  purchase,  sale,
lease,  management,  accounting  or  operation,  and to maintain its net working
capital and  stockholders'  equity in a manner  consistent  with its  operations
during the twelve-month period prior to the date hereof.

         (b) No  General  Increases.  Other than  raises or  bonuses  granted to
employees

                                       22




in connection  with annual  reviews  conducted in  accordance  with past company
practices, Sellers shall not permit VSI to grant any general or uniform increase
in the  rates of pay of  employees  of VSI,  nor grant any  general  or  uniform
increase in the benefits  under any bonus or pension  plan or other  contract or
commitment  to,  for or with any  employees;  and VSI  shall  not  increase  the
compensation payable or to become payable to officers, key salaried employees or
agents, or increase any bonus, insurance, pension or other benefit plan, payment
or arrangement made to, for or with any such officers, key salaried employees or
agents.

         (c) No Dividends,  Issuances,  Repurchases, etc. Except as set forth on
Section 4.03(c) of the Disclosure Letter or as otherwise  expressly  provided in
this Agreement or the Disclosure Letter hereto,  Sellers shall not permit VSI to
declare or pay any dividends (whether in cash, shares of stock or otherwise) on,
or make any other  distribution  in respect of, any shares of its capital stock,
or issue, purchase,  redeem or acquire for value any shares of its capital stock
or any options or other rights related thereto.

         (d)  Contracts and  Commitments.  Sellers shall not permit VSI to enter
into any contract or  commitment or engage in any  transaction  not in the usual
and ordinary  course of business or not consistent  with the customary  business
practices of VSI.

         (e)  Purchase  and Sale of  Assets.  Sellers  shall not  permit  VSI to
purchase  any  capital  asset with a market  value in excess of  $5,000,  or any
capital  assets of market value  aggregating in excess of $10,000 unless done so
in the  ordinary  course of  business.  Sellers  shall not permit VSI to sell or
otherwise dispose of any capital asset.

         (f)  Insurance.  Sellers  shall  cause VSI,  to the best  Knowledge  of
Sellers,  to  maintain  up until the  Closing  Date with  financially  sound and
reputable  insurance  companies,  funds  or  underwriters,   adequate  insurance
(including  without  limitation  the insurance  described on Section 2.14 of the
Disclosure  Letter) of the kinds,  covering  such risks and in such  amounts and
with such  deductibles  and exclusions as are consistent  with prudent  business
practice.

         (g)  Preservation of  Organization.  Sellers shall cause VSI to use all
reasonable efforts to preserve its business organization intact, and to preserve
for Purchaser  the present  relationships  of VSI's  suppliers and customers and
others having business relations with VSI.

         (h) No Default.  Sellers  shall not permit VSI to do any act or omit to
do any act, or permit any act or  omission  to act,  which will cause a material
breach  of  any  contract,  commitment  or  obligation  of VSI  or  which  might
jeopardize any of the Licenses.

         (i)  Compliance  with Laws.  Sellers shall cause VSI to comply with all
laws, regulations and orders applicable with respect to its business.

         (j) Advice of Change. Sellers will promptly advise Purchaser in writing
of any Material Adverse Effect.

                                       23




         (k) No  Shopping.  Sellers  will  not,  prior  to the  Closing  Date or
Termination of this Agreement  pursuant to Section 7.01, and will not permit any
of their  respective  Affiliates or VSI to, negotiate for, solicit or enter into
any agreement with respect to the sale or transfer of any shares of Stock or any
substantial  portion  of the  assets  of VSI or any  merger  or  other  business
combination of VSI to or with any Person other than Purchaser.

         SECTION 4.04 PUBLIC STATEMENTS.  Prior to the Closing Date, none of the
Parties to this Agreement shall, and each party shall use all reasonable efforts
so that none of its or his  advisors,  officers,  directors or employees  shall,
except with the prior written consent of the other Parties, publicize,  announce
or describe to any third person, except their respective advisors and employees,
the execution or terms of this Agreement, the Parties hereto or the transactions
contemplated  hereby,  except as required by law, applicable gaming authorities,
the rules of the New York Stock Exchange, the Nasdaq Stock Market, the rules and
regulations of the SEC, or as required  pursuant to this Agreement to obtain the
consent of such third person.

                                    ARTICLE 5
                               CLOSING CONDITIONS

         SECTION  5.01  CONDITIONS  APPLICABLE  TO ALL PARTIES.  The  respective
obligations of each party to consummate the  transactions  contemplated  by this
Agreement shall be subject to the satisfaction or, where permissible,  waiver by
such party of the following conditions at or prior to the Closing Date:

         (a) No statute, rule, regulation,  executive order, decree, preliminary
or permanent  injunction or restraining order shall have been enacted,  entered,
promulgated  or  enforced  by any  court  of  competent  jurisdiction  or  other
Governmental  Entity  which  prohibits  or  restricts  the  consummation  of the
transactions  contemplated  by this  Agreement,  and no action,  suit,  claim or
proceeding by a state or federal  Governmental  Entity before any court or other
Governmental  Entity  shall have been  commenced  and be pending  which seeks to
prohibit or restrict the consummation of the  transactions  contemplated by this
Agreement.

         (b) The transactions  under the Asset Purchase  Agreement  entered into
August  31,  2004  between   Churchill  Downs   Incorporated  and  Fair  Grounds
Corporation,  as  amended,  shall  have  closed;  provided,  however,  that  the
obligations  of Purchaser to consummate  the  transaction  contemplated  by this
Agreement  shall  not be  subject  to this  condition  to the  extent  that such
transaction does not close based on any action of Purchaser which  constitutes a
breach of that agreement.

         (c) The Parties  shall have  agreed  upon and  executed a Flow of Funds
Memorandum that details the payment  instructions and wiring information for all
of the payments due pursuant to Section 1.03 and Section 1.06.

         SECTION 5.02 CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to consummate  the  transactions  contemplated  by this  Agreement are
subject

                                       24




to the satisfaction of the following conditions unless waived by Purchaser:

         (a) The representations and warranties of Sellers, as set forth in this
Agreement,  shall be true and correct in all material respects as of the date of
this  Agreement  and as of the  Closing  Date  as  though  made on and as of the
Closing Date,  except as otherwise  contemplated by this Agreement,  and Sellers
shall have  performed in all material  respects all  obligations  required to be
performed  by them  under  this  Agreement  at or  prior  to the  Closing  Date,
including the delivery of all closing items for the benefit of Purchaser.

         (b) All  consents  and  approvals of third  parties  necessary  for the
consummation of the transactions  contemplated by this Agreement shall have been
obtained on reasonable commercial terms and conditions. Sellers shall obtain all
necessary   permits,   authorizations,   consents  and  approvals   required  by
Governmental Entities prior to the Closing Date, other than permits,  authorized
consents  and  approvals,  the lack of which  will not have a  Material  Adverse
Effect.

         (c)  There  shall  not have  been  any  material  damage  to or loss or
destruction  of any properties or assets owned or leased by VSI that would cause
a Material Adverse Effect.

         (d) There  shall be no  mortgages,  unsatisfied  judgments,  or pending
litigation  with any claim for  injunctive  relief or for  damages  in excess of
$10,000  filed  against VSI and there shall be no mortgages or liens against the
Stock.

         (e) LVI shall have  delivered to  Purchaser  an accurate,  complete and
up-to-date aging of all of the accounts  receivable of VSI which existed as of a
date that is not more than two days prior to the Closing Date.

         (f) All  corporate  and other  approvals  required  to be  obtained  by
Sellers in connection  with the  transactions  contemplated  by the  Transaction
Documents and the form and  substance of all  certificates  and other  documents
delivered  hereunder  shall be reasonably  satisfactory in form and substance to
Purchaser.

         (g) All of the directors and officers of VSI shall have resigned  their
positions  with VSI effective as of the Closing other than Fred  Bergquist,  and
prior  thereto  shall  have  executed  appropriate  releases  of  VSI  and  such
appropriate  documents  with  respect to the transfer or  establishment  of bank
accounts, signing authority, etc., as Purchaser shall have reasonably requested.

         (h) Sellers shall have delivered to Purchaser:

                  (i)      a  Certificate  of  Good  Standing,   issued  by  the
                           Secretary   of  State  of  the  State  of   Louisiana
                           evidencing  VSI's  corporate  good  standing  in such
                           state;

                  (ii)     a copy of the Articles of  Incorporation  and By-laws
                           of VSI (each as

                                       25




                           amended  to  date)  and  an  incumbency  certificate
                           listing the  officers and directors of VSI, each duly
                           certified by an officer of VSI;

                  (iii)    the minute  books,  stock  certificate  and  transfer
                           books,  corporate seal and other corporate records of
                           VSI;

                  (iv)     a consent from the spouse of each individual  Seller,
                           duly  executed  and in the form of  Exhibit  "G" (the
                           "SPOUSAL CONSENT");

                  (v)      all keys and  authorizations  for  transfer  of VSI's
                           post office boxes;

                  (vi)     all funds required to be delivered or paid by Sellers
                           at the Closing; and

                  (vii)    a certificate  of a duly  authorized  officer of LVI,
                           dated as of the Closing  Date,  certifying  as to the
                           incumbency of any person  executing this Agreement or
                           any  certificate  or  other  document   delivered  in
                           connection  with this  Agreement on behalf of LVI and
                           certifying such other matters as Purchaser reasonably
                           requests.

         (i) Sellers shall have delivered to Purchaser in writing,  at and as of
the Closing,  a  certificate  duly  executed by Sellers,  in form and  substance
reasonably  satisfactory to Purchaser and Purchaser's  counsel,  certifying that
the conditions in each of Sections 5.02(a) - (h) have been satisfied.

         SECTION 5.03  CONDITIONS TO OBLIGATIONS OF SELLERS.  The obligations of
Sellers to  consummate  the  transactions  contemplated  by this  Agreement  are
subject to the  satisfaction  of the following  conditions  unless waived by all
Sellers:

         (a) The  representations  and  warranties  of Purchaser as set forth in
this Agreement shall be true and correct in all material respects as of the date
of this  Agreement  and as of the  Closing  Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement,  and Purchaser
shall have  performed in all material  respects all  obligations  required to be
performed by it in this Agreement at or prior to the Closing Date, including the
delivery of all closing items for the benefit of Sellers.

         (b) Sellers  shall have  received a  certificate  of a duly  authorized
officer  of  Purchaser,  dated  as of the  Closing  Date,  certifying  as to the
incumbency of any person  executing this  Agreement or any  certificate or other
document  delivered in connection  with this Agreement and certifying such other
matters as Sellers shall reasonably request.

         (c)  Purchaser  shall  have paid (i) the  Sellers  the  Purchase  Price
pursuant to the percentages and wire  instructions  set forth on Section 1.02 of
the  Disclosure   Letter,   (ii)  the  Sellers  the  Bankroll  Amount  PLUS  the
Reimbursements  PLUS  $5,000 in petty cash by (A) making wire  transfers  of the
Bankroll  Amount  MINUS the  Undeposited  Net Win PLUS the  Reimbursements  PLUS
$5,000 in petty  cash MINUS  $500,000  as of the  Closing to the

                                       26




Sellers in the percentage allocation set forth on Section 1.06 of the Disclosure
Letter,  (B) writing and  delivering  a check to each of the Sellers for writing
and  delivering  a check to each of the  Sellers for the  Seller's  share of the
Undeposited  Net Win in the  percentage  allocation set forth in Section 1.06 of
the  Disclosure  Letter,  and (C) making a wire  transfer  of $500,000 as of the
Closing to the Escrow Agent.

         (d) All  corporate  and other  approvals  required  to be  obtained  by
Purchaser in connection  with the  transactions  contemplated by the Transaction
Documents  and the  form  of all  certificates  and  other  documents  delivered
hereunder shall be reasonably satisfactory to LVI.

         (e)  The  suit  entitled  Fair  Grounds  Corporation  and  Finish  Line
Management  Corp. v. Video  Services,  Inc. in U.S.  Bankruptcy  Court,  Eastern
District of Louisiana, shall have been dismissed with prejudice.

         (f) Purchaser shall have delivered to Sellers, in writing, at and as of
the Closing,  a certificate  duly  executed by Purchaser,  in form and substance
reasonably  satisfactory  to Sellers and Sellers'  counsel,  certifying that the
condition in each of Sections 5.03 (a) - (e) have been satisfied.

                                    ARTICLE 6
                             POST-CLOSING COVENANTS

         The Parties  agree as follows with respect to the period  following the
Closing Date:

         SECTION 6.01 GENERAL.  In case, at any time after the Closing Date, any
further  action  is  necessary  to  carry  out the  purposes  of this  Agreement
(specifically  but without  limitation those matters required to satisfy Section
5.01),  each of the  Parties  will take such  further  action as any other party
reasonably may request.

         SECTION 6.02 EMPLOYEE RETENTION.

         (a) Purchaser may, in its discretion, offer employment to any employees
of VSI, but it is under no  obligation  to offer  employment  to any employee of
VSI.  Sellers  shall be  responsible  for all payroll,  vacation  pay, sick pay,
severance  pay and other  benefits  and  obligations  owed to or  accrued to any
employee of VSI as of the Closing Date. Sellers shall use all reasonable efforts
to cause all employees of VSI to return to VSI all company  property,  including
credit  cards.  With  respect  to any  employee  of VSI who is not  retained  by
Purchaser, Sellers shall be responsible for any severance expenses and all other
contractually or legally imposed  obligation and liabilities,  including without
limitation  any  requirements,  if  applicable,  of the Worker's  Adjustment and
Retraining  Notification  Act  of  1988  ("WARN  ACT").  With  respect  to  such
employees,  Sellers  will  comply  fully  with the  WARN Act and hold  Purchaser
harmless against  liabilities  that arise out of its violation by Sellers.  With
respect to any termination or layoff by Purchaser of employees after the Closing
Date,  Purchaser  will comply fully with the WARN Act and hold Sellers  harmless
against liabilities that arise out of such termination by Purchaser.

                                       27




         (b) Notwithstanding anything in this Section 6.02 to the contrary, from
the Closing Date to the first anniversary of the Closing Date,  Purchaser shall,
or shall cause VSI to, provide Fred Bergquist and Leslie  Hepting,  salaries and
wages  at no less  than the  levels  of such  salaries  and  wages  paid to them
immediately  prior to the Closing  Date,  and bonus  opportunities  and employee
benefits  that are the  same as  those  provided  to  other  similarly  situated
employees of Purchaser and its affiliates.

         SECTION 6.03 NON-COMPETITION; NON-SOLICITATION.

         (a) For a period of two years from the Closing  Date,  Alliance and the
other Sellers shall not, and Alliance shall cause its  subsidiaries,  successors
and assigns, not to:

                  (i)      carry on or engage in a  business  similar to that of
                           the  Business in the  Louisiana  parishes of Orleans,
                           Jefferson,  Lafourche,  St. Bernard, St. Charles, St.
                           John  the  Baptist,   St.  Tammany,  and  Terrebonne;
                           pursuant  to  this  obligation,  Alliance  shall  not
                           directly or indirectly own, operate,  manage, control
                           or   participate   in  the   ownership,   management,
                           operation  or control,  or be paid or employed by, or
                           otherwise become associated with,  affiliated with or
                           provide  assistance  to,  whether  as  a  consultant,
                           independent contractor,  shareholder, partner, agent,
                           associate, principal,  representative or in any other
                           capacity,   any  business  entity  that  directly  or
                           indirectly competes with the Business; or

                  (ii)     not directly or  indirectly,  for itself or on behalf
                           of any other person or entity,  solicit or induce any
                           person, firm, corporation or other entity who is, was
                           or  had  been a  customer  of  the  Business,  or any
                           prospective customer of the Business,  to transfer or
                           divert their  patronage or business from the Business
                           to  any  other  entity  engaged  in a  business  that
                           directly or indirectly  competes with the Business in
                           the   Louisiana   parishes  of  Orleans,   Jefferson,
                           Lafourche,  St. Bernard,  St.  Charles,  St. John the
                           Baptist, St. Tamman, and Terrebonne; or

                  (iii)    solicit the  employment  of any employee of Purchaser
                           or, after the Closing,  VSI, unless (A) such employee
                           resigns  voluntarily  (without any solicitation  from
                           Alliance or any of its  subsidiaries,  successors and
                           assign), or (B) Purchaser consents in writing to such
                           solicitation,  or (C) such  employee is terminated by
                           his  or  her  employer  or the  Purchaser  after  the
                           Closing Date.

         (b) In the event any  provision  set forth in  Section  6.03(a) of this
Agreement should be deemed unenforceable under controlling law, Alliance and the
Purchaser  agree that such  provision  shall be  reformed by the court to permit
enforcement of such provision to the maximum extent  permitted under  applicable
law. Alliance  acknowledges that its breach or threatened or attempted breach of
its obligations  under Section 6.03(a) of this Agreement will cause  irreparable
harm to the Purchaser  not  compensable  by monetary

                                       28




damages alone and that the Purchaser shall be entitled, in addition to all other
available remedies,  to temporary and permanent  injunctive relief without being
required to prove irreparable harm or furnish any bond of other security.

         (c)  Notwithstanding  anything in this  Section  6.03 to the  contrary,
nothing  contained  in this  Agreement  shall  prohibit  Alliance  or any of its
subsidiaries, successors and assigns from:

                  (i)      purchasing and holding as an investment not more than
                           5% of any class of the  issued  and  outstanding  and
                           publicly traded (on a recognized national or regional
                           securities   exchange  or  in  the   over-the-counter
                           market) security of any  corporation,  partnership or
                           other  business  entity  that  conducts a business in
                           competition with the Business; or

                  (ii)     the  placement,   distribution   and  advertising  by
                           Alliance and its  Affiliates  through sales or leases
                           in the  ordinary  course of their  business of gaming
                           devices,   systems  or  games   under   participation
                           agreements or daily fee arrangements, or in wide area
                           progressive networks under authority of the Louisiana
                           licenses held by Alliance or its Affiliates, or other
                           activities of a distributor or manufacturer of gaming
                           devices  or  systems,  so  long  as  Alliance  or its
                           Affiliates  perform  the  customary  activities  of a
                           distributor  or  manufacturer  of gaming  devices  or
                           systems  or an  operator  of an  inter-casino  linked
                           system.

         (d) Notwithstanding  anything in this Section 6.03 to the contrary, the
provisions  of this Section 6.03 shall not be deemed to be violated in the event
that a Change of Control of Alliance, causes Alliance or its successor entity to
compete with the Business as conducted on the Closing Date if (i) the Company or
entity  causing the Change of Control was already  competing  with the  Business
prior to such  Change of Control  and (ii) the  consummation  of such  Change of
Control occurs at least six months after the Closing Date.

         (e)  Notwithstanding  anything in this  Section  6.03 to the  contrary,
nothing  contained in this Agreement  shall prohibit the Sellers from purchasing
and  holding  as an  investment  not more than 5% of any class of the issued and
outstanding and publicly traded (on a recognized national or regional securities
exchange  or in  the  over-the-counter  market)  security  of  any  corporation,
partnership  or other  business  entity that conducts a business in  competition
with the Business.

         (f)  Notwithstanding  anything in this  Section  6.03 to the  contrary,
nothing  contained  in this  Agreement  shall  prohibit  Steven M.  Rittvo  from
engaging in the business of consulting,  providing  financial advice and capital
raising activities for entities in the gaming industry (provided that Mr. Rittvo
does not acquire any  ownership  interest in  connection  with any such  capital
raising  activities),  including  but  not  limited  to  operating  his  current
businesses,  The Innovation Group, Innovation Capital, L.L.C. and Urban

                                       29




Systems,  Inc.,  and any new  businesses  which he may form to offer  consulting
services,  providing  financial advice and capital raising activities for gaming
entities in the state of Louisiana.

         SECTION 6.04 ALLIANCE GAMING  CORPORATION 401K PROFIT SHARING PLAN. LVI
covenants to take such action to remove VSI as a  participating  employer  under
the Alliance Gaming  Corporation  401(k) Savings Plan (the "ALLIANCE PLAN"). LVI
agrees to take all action so that all employees of VSI who are  participants  in
the Alliance Plan and are actively  employed by VSI on the Closing Date shall be
100 percent vested in their account balances under the Alliance Plan.

                                    ARTICLE 7
                            TERMINATION AND AMENDMENT

         SECTION 7.01  TERMINATION.  This Agreement may be terminated and may be
abandoned at any time prior to the Closing Date:

         (a) By unanimous mutual consent of Purchaser and all Sellers;

         (b) By Purchaser if (i) there shall have been a material  breach of any
representation,  warranty, covenant or agreement on the part of Sellers and such
breach  shall  not have  been  cured  prior to the  latest  of (A) ten (10) days
following  notice of such breach  (provided  that if such breach cannot be cured
within 10 days with the exercise of reasonable diligence, then Seller shall have
such additional time to cure such breach), and (B) the Closing Date; or (ii) any
permanent  injunction or other order of a court or other competent  Governmental
Entity  preventing the  transactions  contemplated  by this Agreement shall have
become final and non-appealable;

         (c) By  Sellers if (i) there  shall have been a material  breach of any
representation,  warranty,  covenant or agreement on the part of Purchaser,  and
such  breach  shall not have been cured prior to the latest of (A) ten (10) days
following  notice of such breach  (provided  that if such breach cannot be cured
within 10 days with the exercise of reasonable  diligence,  then Purchaser shall
have such additional time to cure such breach) and (B) the Closing Date; or (ii)
any  permanent  injunction  or  other  order  of  a  court  or  other  competent
Governmental  Entity preventing the transactions  contemplated by this Agreement
shall have become final and non-appealable; or

         (d) By Purchaser or Sellers if the  transactions  contemplated  by this
Agreement  shall  not have been  consummated  on or before  December  15,  2004;
provided, that the right to terminate this Agreement under Section 7.01(d) shall
not be available to any party whose breach of its representations and warranties
in  this  Agreement  or  whose  failure  to  perform  any of its  covenants  and
agreements  under this Agreement has resulted in the failure of the transactions
contemplated by this Agreement to occur on or before such date.

         SECTION 7.02 EFFECT OF  TERMINATION.  In the event of a termination  of
this  Agreement as provided in Section  7.01,  this  Agreement  shall  forthwith
become void and

                                       30




there shall be no liability or  obligation  under any  provisions  hereof on the
part  of  Purchaser  or  Sellers,  except  (a)  pursuant  to the  covenants  and
agreements  contained  in  Section  10.01  and  (b)  to  the  extent  that  such
termination results from the willful material breach by a party hereto of any of
its  representations,  warranties,  covenants  or  agreements  set forth in this
Agreement,  in which case the non-breaching  party shall have a right to recover
its damages caused thereby as limited by Article 9 hereof.

         SECTION 7.03 AMENDMENT.  This Agreement may not be amended except by an
instrument in writing signed by each of the Parties hereto.

         SECTION 7.04 EXTENSION;  WAIVER. At any time prior to the Closing Date,
Purchaser and Sellers may, in their respective sole discretion and to the extent
legally  allowed,  (a)  extend  the  time  for  the  performance  of  any of the
obligations or other acts of the Parties hereto;  (b) waive any  inaccuracies in
the  representations  and  warranties  contained  herein  or  in  any  documents
delivered pursuant thereto;  and (c) waive compliance with any of the agreements
or conditions  contained herein.  Any agreement on the part of a Party hereto to
any such  extension  or  waiver  shall be valid  only if set  forth in a written
instrument signed by or on behalf of such Party.

                                    ARTICLE 8
                                   TAX MATTERS

         SECTION 8.01 ADDITIONAL  DEFINITIONS.  As used in this  Agreement,  the
following terms shall have the following definitions:

         "PRE-CLOSING  PERIOD"  means any taxable  period that ends on or before
the Closing Date.

         "POST-CLOSING  PERIOD"  means any  taxable  period  that ends after the
Closing Date.

         "TAX RETURN" means any return,  declaration,  report, claim for refund,
information  return,  statement  or other  document  (including  any  related or
supporting  estimates,   elections,   schedules,   statements,   attachments  or
information)  filed or required to be filed in connection with the determination
assessment or collection of any Tax or the administration of any law, regulation
or administrative requirements relating to any Tax, and including any amendments
thereto.

         SECTION 8.02 PREPARATION AND FILING OF TAX RETURNS.

         (a) LVI will be  responsible  for  preparing and filing (or causing the
preparation and filing) of all VSI Tax Returns for any Pre-Closing  Period.  Any
such  Tax  Return  shall  be  prepared  in a manner  consistent  with the  prior
practices  and  positions  of VSI in the  preparation  of its  Tax  Returns,  as
determined in the good faith judgment of Sellers; PROVIDED, HOWEVER, that in all
events such Tax Returns shall be prepared in a manner consistent with applicable
law.  Sellers  shall  permit  Purchaser  to review and  comment on each such Tax
Return  prior to filing and shall  make such  revisions  to such Tax  Returns as
Sellers deem  acceptable  in their sole and absolute  discretion.  Purchaser and
Sellers

                                       31




shall cooperate (each at their own expense) in the preparation and filing of any
Tax  Returns  referred  to in this clause (a). On or before the due date of such
Tax  Returns,  Sellers  shall pay (or advance to  Purchaser  or VSI the funds to
pay),  all Taxes  arising  with respect to such Tax  Returns.  Sellers  shall be
responsible for all Taxes and additions,  including all  assessments,  interest,
penalties  and  fines,  for all  Tax  periods  within  the  Pre-Closing  Period,
including  without  limitation  for Taxes of any entity other than VSI which are
required to be paid by VSI.  Should  there be a refund on any Tax Return due VSI
with  regard to the  Pre-Closing  Period,  the net amount of such  refund  after
deduction of any expenses incurred by VSI and Purchaser  directly related to the
cost associated with obtaining the refund shall be paid to Sellers.

         (b) Purchaser shall be responsible for preparing and filing all VSI Tax
Returns for any Post-Closing Period. Any such Tax Returns shall be prepared in a
manner  consistent  with  the  prior  practices  and  positions  of  VSI  in the
preparation  of its Tax Returns,  as  determined  in the good faith  judgment of
Purchaser;  provided,  however,  that in all events  such Tax  Returns  shall be
prepared in a manner consistent with applicable law. For any Post-Closing Period
which includes any period prior to the Closing,  Purchaser  shall permit Sellers
to review and  comment  on such Tax  Return  prior to filing and shall make such
revisions  to such Tax  Return as  Purchaser  deems  acceptable  in its sole and
absolute discretion.  Sellers shall not be responsible for any Taxes for any Tax
period  which  begins after the  Pre-Closing  Period.  For any Tax period in the
Post-Closing  Period  which  begins  prior  to the  Closing,  Sellers  shall  be
responsible for those Taxes attributable to that portion of the Tax period prior
to and through the Closing Date.

         SECTION 8.03 SELLERS' CONTEST RIGHTS. Sellers shall have the sole right
(but not the obligation) to control, defend, settle,  compromise or prosecute in
any manner any audit,  examination,  investigation,  hearing or other proceeding
with  respect  to any Tax  Return of VSI  involving  only  Pre-Closing  Periods.
Sellers  shall not  settle,  compromise  or abandon  without  Purchaser's  prior
consent,  which  consent  shall not be  unreasonably  withheld,  conditioned  or
delayed,  any issue within  Sellers'  control under the preceding  sentence.  In
addition, (a) Sellers shall keep Purchaser duly informed of any proceedings with
respect to a  Pre-Closing  Period in a timely  manner and (b)  Purchaser (or its
properly  authorized  representative)  shall be  entitled to receive in a timely
manner copies of all  correspondence  and documents relating to such proceedings
and may, at its option,  observe  such  proceedings  (including  any  associated
meetings  or  conferences)   and  participate  (at  its  own  expense)  in  such
proceedings.

         SECTION 8.04 PURCHASER'S  CONTEST RIGHTS.  Except as expressly provided
in Section 8.03, Purchaser shall have the sole right (but not the obligation) to
control,  defend,  settle,  compromise,  or  prosecute  in any  manner an audit,
examination,  investigation, hearing or other proceeding with respect to any Tax
Return  of VSI  that  relate  to (a)  only  Post-Closing  Periods,  or (b)  both
Pre-Closing  and  Post-Closing  Periods;  provided,  however,  that Taxes or Tax
issues for a Pre-Closing  Period may not be settled or  compromised  without the
prior  written  consent of  Sellers,  which  consent  shall not be  unreasonably
withheld,  conditioned or delayed. In addition, (i) Purchaser shall keep Sellers
duly informed of any  proceedings in connection  with a Pre-Closing  Period in a

                                       32




timely manner and (ii) Sellers (or their  properly  authorized  representatives)
shall be entitled to receive in a timely manner copies of all correspondence and
documents  relating to such  proceedings and may, at their option,  observe such
proceedings (including any associated meetings or conferences).

         SECTION 8.05 NOTIFICATION REQUIREMENTS.

         (a)   Purchaser   shall   promptly   forward  to  Sellers  all  written
notifications and other written  communications  from any Tax authority received
by Purchaser or VSI relating to any Pre-Closing  Period of VSI.  Purchaser shall
execute or cause to be executed any power of attorney or other  document or take
such actions as required by Sellers to enable Sellers to take any action Sellers
reasonably  deem  appropriate  with respect to any  proceedings  relating to any
Pre-Closing Period.

         (b)  Sellers  shall  promptly  forward  (or cause to be  forwarded)  to
Purchaser all written  notifications and other written  communications  from any
Tax authority  received by Sellers relating to any  Post-Closing  Period of VSI.
Sellers  shall  execute or cause to be  executed  any power of attorney or other
document or take such actions as  requested by Purchaser to enable  Purchaser to
take any action  Purchaser  reasonably  deems  appropriate  with  respect to any
proceedings relating to any Post-Closing Period of VSI.

         SECTION 8.06  COOPERATION.  Subject to Section 8.07,  the Parties shall
each at their own expense cooperate with, and make available to, each other such
Tax data and other information as may be reasonably  required in connection with
(a)  the  preparation  or  filing  of any  Tax  Return,  election,  consent,  or
certification,  or any claim for refund,  (b) any determinations of liability of
Taxes,  or (c) an audit,  examination or other  proceeding with respect to Taxes
("TAX DATA"). Such cooperation shall include,  without limitation,  making their
respective  employees  and  independent   auditors  or  accountants   reasonably
available on a mutually convenient basis for all reasonable purposes, including,
without limitation,  to provide  explanations and background  information and to
permit the copying of books, records,  schedules,  workpapers,  notices, revenue
agent reports,  settlement or closing agreements and other documents  containing
the Tax Data ("TAX  DOCUMENTATION").  Notwithstanding  the foregoing,  Purchaser
shall not be obligated  to provide to Sellers any Tax Data or Tax  Documentation
for Tax periods commencing after the Closing Date, unless specifically requested
by Sellers in connection with a Tax matter for which Sellers are responsible.

         SECTION 8.07 RETENTION OF DATA AND DOCUMENTATION.  The Tax Data and the
Tax  Documentation  shall be retained by VSI until one year after the expiration
of all  applicable  statutes  of  limitations  (including  extensions  thereof);
provided,  however,  that in the event an audit,  examination,  investigation or
other  proceeding has been  instituted  prior to the expiration of an applicable
statute of  limitations,  the Tax Data and Tax  Documentation  relating  thereto
shall be retained by VSI until there is a final  determination  thereof (and the
time for any appeal has expired). VSI covenants to provide access and copies any
of such materials as promptly as practicable upon request to any of the Sellers.

                                       33






         SECTION  8.08 TAX AUDIT  COSTS.  Sellers  shall be  responsible  in the
percentages  set forth on Section 1.06 of the  Disclosure  Letter for paying all
costs and fees  incurred  with respect to any  proceedings  described in Section
8.03  (except  for those costs and fees  incurred  directly  by  Purchaser)  and
Purchaser  shall be  responsible  for  paying all costs and fees  incurred  with
respect to any proceedings described in Section 8.04 (except for those costs and
fees incurred directly by Sellers).

         SECTION 8.09 TAX SHARING AGREEMENTS.  Any tax sharing agreement between
VSI and any other entity is  terminated  as of the Closing Date and will have no
further effect for any taxable year (whether the current year, a future year, or
a past year).

         SECTION 8.10 RETURNS FOR PERIODS THROUGH THE CLOSING DATE. Sellers will
include the income of VSI (including any deferred  income  triggered into income
by Reg. ss.  1.1502-3 and any excess loss  accounts  taken into income under Reg
ss.  1.1502-19) on the VSI Group's  consolidated  federal income Tax Returns for
all  periods  through  the  Closing  Date  and  pay  any  federal  income  Taxes
attributable to such income.  Sellers will take no position or cause to be taken
any position on such returns that would  adversely  affect VSI after the Closing
Date.  The income of VSI will be  apportioned  to the period up to and including
the Closing  Date and the period  after the Closing Date by closing the books of
VSI as of the end of the Closing Date.

         SECTION 8.11 CARRYBACKS.  Sellers will immediately pay to Purchaser any
Tax refund (or  reduction in Tax  liability)  resulting  from a carryback of any
post  acquisition  Tax  attribute to VSI into the VSI Group's  consolidated  Tax
Return,  when such refund or reduction is received.  Sellers will cooperate with
VSI in  obtaining  such  refunds (or  reductions  in Tax  liability),  including
through the filing of amended Tax Returns or refund claims.

         SECTION 8.12 RETENTION OF CARRYOVERS.  Sellers will not elect to retain
any net operating  carryovers  or capital loss  carryovers of VSI under Reg. ss.
1.1502-20(g).

                                    ARTICLE 9
                            INDEMNIFICATION; REMEDIES

         SECTION 9.01 INDEMNIFICATION BY SELLERS.  Except as otherwise expressly
provided in this Article 9, LVI (and Alliance jointly, severally, and solidarily
with LVI) and the other  Sellers  severally  shall  defend,  indemnify  and hold
harmless  Purchaser  and  its  officers,   directors,   employees,   affiliates,
successors and assigns (collectively,  "PURCHASER'S  INDEMNIFIED PERSONS"),  for
its own acts and shall reimburse Purchaser or Purchaser's  Indemnified  Persons,
for, from and against each and every demand,  claim,  action,  loss (which shall
include any diminution in value), liability,  judgment, damage, cost and expense
(including,  without limitation,  interest,  penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and expenses of attorneys,
accountants and other professional advisors) (collectively, "LOSSES") imposed on
or  incurred  by  Purchaser  or  Purchaser's  Indemnified  Persons,  directly or
indirectly,  relating  to,  resulting  from or arising out of: (a) any  material
inaccuracy in a representation or warranty made by such Seller in this Agreement
or any certificate,  document or other

                                       34




instrument  delivered or to be delivered  pursuant hereto in any respect whether
or not  Purchaser  or  Purchaser's  Indemnified  Persons  relied  thereon or had
Knowledge  thereof or (b) any material breach or nonperformance of any covenant,
agreement or other  obligation  of such Seller or any  certificate,  document or
other  instrument   delivered  or  to  be  delivered   pursuant   hereto;   this
indemnification obligation set forth herein shall be subject to the following:

                  (i)      No amount shall be payable by any Seller  pursuant to
                           this  Section  9.01,  unless and until the  aggregate
                           amount of Losses  actually  suffered  or  incurred by
                           Purchaser exceeds  $100,000.00  ("SELLERS'  INDEMNITY
                           BASKET") and then each Seller,  as applicable,  shall
                           indemnify  Purchaser  for such Losses  including  the
                           Sellers' Indemnity Basket;  notwithstanding  anything
                           in the foregoing to the contrary,  Sellers' Indemnity
                           Basket shall not apply to any claim by Purchaser  for
                           indemnity  based  upon there  being any  Indebtedness
                           outstanding  at the  Closing  and  Sellers  shall  be
                           obligated  to  indemnify  Purchaser  for  all  Losses
                           resulting   from   there   being   any   Indebtedness
                           outstanding at the Closing; and

                  (ii)     The  maximum  indemnity  obligation  of all  Sellers,
                           collectively, shall not exceed $2,000,000.00.

         SECTION  9.02   INDEMNIFICATION  BY  PURCHASER.   Except  as  otherwise
expressly provided in this Article 9, Purchaser shall defend, indemnify and hold
harmless  each  Seller,  LVI's  officers,  directors,   employees,   affiliates,
successors and assigns  (collectively,  "LVI'S  INDEMNIFIED  PERSONS") and shall
reimburse Sellers or LVI's Indemnified Persons, for, from and against all Losses
imposed on or  incurred  by Sellers or LVI's  Indemnified  Persons,  directly or
indirectly,  relating  to,  resulting  from or arising out of: (a) any  material
inaccuracy in any  representation  or warranty of Purchaser in this Agreement or
any  certificate,  document or other  instrument  delivered  or to be  delivered
pursuant  hereto in any respect  whether or not  Sellers'  or LVI's  Indemnified
Persons  relied thereon or had Knowledge  thereof or (b) any material  breach or
nonperformance  of any covenant,  agreement or other  obligation of Purchaser or
any  certificate,  document or other  instrument  delivered  or to be  delivered
pursuant  hereto;  this  indemnification  obligation  set forth  herein shall be
subject to the following:

                  (i)      No amount shall be payable by  Purchaser  pursuant to
                           this  Section  9.02,  unless and until the  aggregate
                           amount of losses  actually  suffered  or  incurred by
                           Sellers  and  LVI's   Indemnified   Persons   exceeds
                           $100,000.00 ("PURCHASER'S INDEMNITY BASKET") and then
                           Purchaser   shall   indemnify   Sellers   and   LVI's
                           Indemnified  Persons  for such losses  including  the
                           Purchaser's Indemnity Basket.

                  (ii)     The maximum  indemnity  obligation of Purchaser shall
                           not exceed $2,000,000.00.

         SECTION  9.03 NOTICE AND DEFENSE OF THIRD  PARTY  CLAIMS.  If any third
party

                                       35




demand,  claim,  action or  proceeding  shall be brought or asserted  under this
Article  9  against  an  indemnified   person  or  any  successor  thereto  (the
"INDEMNIFIED  PERSON") in respect of which  indemnity  may be sought  under this
Article  9  from  an   indemnifying   person  or  any  successor   thereto  (the
"INDEMNIFYING  PERSON"), the Indemnified Person shall give prompt written notice
thereof  to the  Indemnifying  Person  who shall  have the  right to assume  its
defense,  including  the  hiring  of  counsel  reasonably  satisfactory  to  the
Indemnified  Person and the  payment of all  expenses;  except that any delay or
failure to so notify the  Indemnifying  Person  shall  relieve the  Indemnifying
Person of its  obligations  under this Article 9 only to the extent,  if at all,
that it is prejudiced by reason of such delay or failure. The Indemnified Person
shall have the right to employ separate counsel in any of the foregoing actions,
claims or Proceedings  and to participate in the defense  thereof,  but the fees
and expenses of such counsel shall be at the expense of the  Indemnified  Person
unless  both the  Indemnified  Person and the  Indemnifying  Person are named as
parties  and  the  Indemnified   Person  shall  in  good  faith  determine  that
representation  by the same  counsel  is  inappropriate.  In the event  that the
Indemnifying  Person,  within ten (10) days after  notice of any such  action or
claim,  does not assume the defense thereof,  the Indemnified  Person shall have
the right to undertake  the defense,  compromise  or  settlement of such action,
claim or proceeding for the account of the Indemnifying  Person,  subject to the
right of the Indemnifying Person to assume the defense of such action,  claim or
proceeding with counsel reasonably satisfactory to the Indemnified Person at any
time  prior  to the  settlement,  compromise  or  final  determination  thereof.
Anything in this Article 9 to the  contrary  notwithstanding,  the  Indemnifying
Person shall not,  without the  Indemnified  Person's prior  consent,  settle or
compromise  any action,  claim or proceeding or consent to the entry of judgment
with respect to any action,  claim or proceeding  for anything  other than money
damages paid by the Indemnifying  Person.  The Indemnifying  Person may, without
the  Indemnified  Person's prior consent,  settle or compromise any such action,
claim or proceeding or consent to entry of any judgment with respect to any such
action, claim or proceeding that requires solely the payment of money damages by
the Indemnifying  Person and that includes as an unconditional  term thereof the
release by the  claimant or the  plaintiff  of the  Indemnified  Person from all
liability in respect of such action, claim or proceeding.

         SECTION 9.04 EXCLUSIVE REMEDY.  The Parties  acknowledge and agree that
the  foregoing  indemnification  provisions  in  this  Article  9  shall  be the
exclusive remedy of the Sellers and Purchaser whether in contract, tort or other
applicable law, with respect to the transactions contemplated by this Agreement.

                                   ARTICLE 10
                                  MISCELLANEOUS

         SECTION 10.01 CONFIDENTIALITY. Until the Closing Date and subsequent to
the termination of this Agreement pursuant to Section 7.01,  Purchaser will keep
confidential  and will not disclose to any third party any information  obtained
by  it  from  Sellers  in  connection  with  this  Agreement,  except  (a)  that
information may be disclosed by Purchaser to its advisors in connection with the
negotiation of and the activities  conducted pursuant to this Agreement,  (b) to
the extent that such information is or becomes

                                       36




generally  available  to the public  through no act or omission of  Purchaser in
violation  of this  Agreement,  (c) as may be  ordered  by any  court  or  other
governmental  body  having  authority  to  compel  such  disclosure,  or  (d) as
otherwise required by applicable law, applicable gaming authority,  the rules of
the New York  Stock  Exchange  and the  Nasdaq  Stock  Market  or the  rules and
regulations of the SEC.

         SECTION 10.02 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

         (a) The  representations  and  warranties in this  Agreement (or in any
exhibit hereto) or in any instrument  delivered pursuant to this Agreement shall
survive for two (2) years after Closing.

         (b) The agreements and covenants  provided for in this Agreement (or in
any  exhibit or  schedule  hereto)  shall  survive  the  Closing  for the period
provided in such covenant;  provided however if no such period is provided, such
covenant or agreement  shall  survive for forty-two  (42) months after  Closing;
provided  further that the  agreements  and covenants  provided for in Article 8
shall survive until the expiration of the applicable statute of limitation.  The
agreements  provided  for in any other  instruments  delivered  pursuant to this
Agreement  shall  survive  the  Closing  in  accordance  with the  terms of such
instruments.

         SECTION 10.03  NOTICES.  All notices  hereunder  must be in writing and
shall be deemed to have been given upon  receipt of  delivery  by: (a)  personal
delivery to the designated individual, (b) certified or registered mail, postage
prepaid, return receipt requested, (c) a nationally recognized overnight courier
service  (against  a  receipt  therefore)  or (d)  facsimile  transmission  with
confirmation  of receipt.  All such  notices  must be addressed as follows or to
such other  addresses as to which any party hereto may have  notified the others
in writing:

         If to Purchaser, then to:

                  c/o Churchill Downs Incorporated
                  700 Central Avenue
                  Louisville, Kentucky  40208
                  ATTN: Rebecca C. Reed
                  Fax number:   502-636-4439

         With a copy to:

                  Wyatt, Tarrant & Comb, LLP
                  500 West Jefferson Street
                  Louisville, Kentucky  40202
                  ATTN: Robert A. Heath
                  Fax number: 502-589-0309

         If to Sellers, then to:

                                       37




                  Steven M. Rittvo
                  P. O. Box 2210
                  New Orleans, LA 70176
                  Fax number: (504) 523-5522

                  Ralph Capitelli
                  1100 Poydras St., Suite 2950
                  New Orleans, LA 70163
                  Fax number: (504) 582-2422

                  T. Carey Wicker III
                  1100 Poydras St., Suite 2950
                  New Orleans, LA 70163
                  Fax number: (504) 582-2422

         With a copy to:

                  David J. Lukinovich
                  5740 Citrus Blvd., Suite 102
                  Harahan, LA 70123
                  Fax Number: (504) 818-0408

         If to LVI, then to:

                  Robert L. Saxton
                  Louisiana Ventures, Inc.
                  c/o Alliance Gaming Corporation
                  6601 S. Bermuda Rd.
                  Las Vegas, NV  89119
                  Fax number: (702) 270-7679

         With a copy to:

                  Daniel K. Rester
                  Adams and Reese, LLP
                  451 Florida St., 19th Floor
                  Bank One Center
                  Baton Rouge, LA  70801
                  Fax Number: (225) 336-5220

         SECTION  10.04  HEADINGS;  GENDER.  When a  reference  is  made in this
Agreement  to a  section,  exhibit or  schedule,  such  reference  shall be to a
section,  exhibit or schedule of this Agreement unless otherwise indicated.  The
table of contents and headings  contained in this  Agreement  are for  reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Agreement.  All personal  pronouns used in this Agreement shall include the
other genders, whether used in the masculine, feminine or neuter gender, and the
singular  shall include the plural and vice versa,  whenever and as

                                       38




often as may be appropriate.

         SECTION  10.05 ENTIRE  AGREEMENT;  NO THIRD PARTY  BENEFICIARIES.  This
Agreement  (including  the  documents,  exhibits,  and  instruments  referred to
herein), and the other Transaction Documents (a) constitute the entire agreement
and supersede all prior  agreements,  understandings  and  communications,  both
written and oral,  between  Sellers on the one hand and  Purchaser  on the other
hand with  respect to the subject  matter  hereof,  and (b) are not  intended to
confer  upon any  person  other  than the  Parties  hereto and VSI any rights or
remedies hereunder.

         SECTION 10.06  GOVERNING LAW. This  Agreement  shall be governed by and
construed in accordance  with the laws of the State of Louisiana  without regard
to any applicable principles of conflicts of law.

         SECTION 10.07 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests  or  obligations  hereunder  shall be  assigned  by any of the Parties
hereto  (whether by operation  of law or  otherwise)  without the prior  written
consent of the other Parties.

         SECTION  10.08  SEVERABILITY.  If any term or other  provision  of this
Agreement is invalid,  illegal or  incapable of being  enforced by reason of any
rule of law or  public  policy,  all other  conditions  and  provisions  of this
Agreement  shall  nevertheless  remain in full  force and  effect so long as the
economic  or legal  substance  of the  transactions  contemplated  hereby is not
affected in any adverse manner to either party. Upon such determination that any
term or other provision is invalid,  illegal or incapable of being enforced, the
Parties  hereto shall  negotiate in good faith to modify this Agreement so as to
effect  the  original  intent  of the  Parties  as  closely  as  possible  in an
acceptable  manner  to the end that the  transactions  contemplated  hereby  are
fulfilled  to the extent  possible,  and in any such case such term or provision
shall be deemed  amended to the extent  necessary to make it no longer  invalid,
illegal or unenforceable.

         SECTION 10.09 COUNTERPARTS.  This Agreement may be executed in multiple
counterparts,  each of which shall be deemed an original  and all of which taken
together  shall  constitute one and the same  document.  Fax signatures  will be
valid and deemed original for all purchases under this Agreement.

         SECTION  10.10  EXPENSES.   Except  as  otherwise   specified  in  this
Agreement,  all costs and  expenses,  including,  without  limitation,  fees and
disbursements  of  counsel,   financial  advisors  and  accounts,   incurred  in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the Party  incurring such cost and expenses,  whether or not the Closing
shall have occurred.  No Party shall remit any brokerage fees in connection with
this Agreement.

         SECTION 10.11 AMENDMENTS AND WAIVERS.  No amendment of any provision of
this Agreement  shall be valid unless the same shall be in writing and signed by
Purchaser and Sellers'  Representatives.  No waiver by any Party of any default,
misrepresentation,   or  breach  of  warranty  or  covenant  hereunder,  whether
intentional  or not,  shall be  deemed  to  extend  to any  prior or  subsequent
default,  misrepresentation,  or

                                       39




breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.

         SECTION 10.12  CONSTRUCTION.  The Parties have participated  jointly in
the  negotiation  and drafting of this  Agreement.  In the event an ambiguity or
question of intent or interpretation  arises,  this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise  favoring or  disfavoring  any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign  statute  or law  shall  be  deemed  also  to  refer  to all  rules  and
regulations promulgated thereunder,  unless the context requires otherwise.  The
word "including" shall mean including without limitation.

         SECTION 10.13  UNDERSTANDING.  The Parties  stipulate and agree that at
all times during the course of the  negotiations  surrounding  the execution and
delivery of this Agreement, they, to the extent deemed necessary or advisable in
their sole  discretion,  have been advised and assisted by competent  counsel of
their own choosing and that they have been fully  advised by such counsel of the
effect of each term, condition, provision and stipulation contained herein.

         SECTION 10.14  ARBITRATION.  Any controversy or claim arising out of or
relating  to  this  Agreement,  or the  breach  thereof,  shall  be  settled  by
arbitration  administered  by the  American  Arbitration  Association  under its
Commercial  Arbitration  Rules,  and  judgment  on  the  award  rendered  by the
arbitrator(s)  may be  entered in any court  having  jurisdiction  thereof.  The
hearings for any such arbitration shall be held in New Orleans, Louisiana.

                                   ARTICLE 11
                                   INTERVENORS

         SECTION 11.01 SPOUSAL  CONSENT.  LEE RETZGER RITTVO,  wife of Steven M.
Rittvo, LINDA CAPITELLI, wife of Ralph Capitelli, and FREDERICKA WICKER, wife of
T. Carey Wicker III,  each  acknowledges  and declares that she  intervenes  and
appears  herein for the  express  purpose of joining in the sale of the Stock by
her  respective  husband and hereby  expressly  consents to this Stock  Purchase
Agreement. Each represents that she has duly executed the Spousal Consent.

                         [Signatures on following page]

                                       40




         IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
signed themselves or by their respective duly-authorized officers as of the date
first above written.

                                      PURCHASER:

                                      CHURCHILL   DOWNS   LOUISIANA
                                      VIDEO  POKER  COMPANY, L.L.C.


                                      BY:/s/ M.E. MILLER
                                      Title: TREASURER



                                      SELLERS:

                                      /s/ STEVEN M. RITTVO
                                      STEVEN M. RITTVO


                                      /s/ RALPH CAPITELLI
                                      RALPH CAPITELLI


                                      /s/ T. CAREY WICKER III
                                      T. CAREY WICKER III


                                      LOUISIANA VENTURES, INC.


                                      By:/s/ ROBERT L. SAXTON
                                           Robert L. Saxton


                                      INTERVENORS:


                                      /s/ LEE RETZGER RITTVO
                                      LEE RETZGER RITTVO


                                      /s/ LINDA CAPITELLI
                                      LINDA CAPITELLI


                                       41




                                      /s/ FREDERICKA WICKER
                                      FREDERICKA WICKER


                                      FOR PURPOSES OF SECTION 6.03
                                      AND SECTION 9.01:

                                      ALLIANCE GAMING CORPORATION


                                      By:/s/ ROBERT L. SAXTON
                                      Title:EXEC VICE PRESIDENT

                                       42





                                  EXHIBIT INDEX


Exhibit A -          Operating Agreement dated March 9, 1992 Addendum
                     dated November 9, 1995 Second Addendum dated November
                     1, 2001 Third Addendum dated December 4, 2001 Fourth
                     Addendum dated April 30, 2003

Exhibit B -          Form of Escrow Agreement

Exhibit C -          Adam and Reese LLP Opinion

Exhibit D -          LHBPA Release

Exhibit E -          Krantz Release

Exhibit F -          Withdrawal of Objection to Assignment

Exhibit G -          Spousal Consent



                                       43



Exhibits and schedules to the Stock Purchase  Agreement have been  intentionally
omitted  because they are not material.  The  registrant  agrees to furnish such
omitted exhibits and schedules supplementally to the Commission upon request.

                                       44

EX-99.1

EXHIBIT 99.1

FOR IMMEDIATE RELEASE Contact: Mike Ogburn
Churchill Downs Incorporated
(502) 636-4415(office)
(502)262-0224(mobile>
mogburn@kyderby.com

CHURCHILL DOWNS INCORPORATED COMPLETES FAIR GROUNDS RACE COURSE
AND RELATED ACQUISITIONS

LOUISVILLE, Ky. (Oct. 15, 2004) — Churchill Downs Incorporated (Nasdaq: CHDN) (“CDI” or the “Company”) today announced that it successfully closed its $47 million transaction to acquire Fair Grounds Race Course (“Fair Grounds”) in New Orleans and its five off-track betting (“OTB”) facilities. CDI also announced it closed the acquisitions of two related New Orleans-area operations, Finish Line Management Corp. (“Finish Line”) and Video Services, Inc. (“VSI”).

        Thomas H. Meeker, CDI’s president and chief executive officer, said the racetrack acquisition marks a new chapter for both CDI and Fair Grounds.

        “This is an exciting day for CDI, Fair Grounds, horsemen and racing fans across the country as we bring together a legendary racing company and the nation’s third-oldest racetrack,” said Meeker. “Under our stewardship, we will work to renew Fair Grounds’ legacy as one of the nation’s top destinations for winter racing. We will reinvest in the facility, deliver an outstanding live racing product and distribute this product through CDI’s unrivaled simulcast platform.

        “In acquiring Fair Grounds, we also advance our Company’s strategic objectives,” continued Meeker. “We enter the Louisiana market and create a broader racing circuit for our horsemen. We supplement our full-year racing calendar and offer a full-year simulcast product. In addition, for the first time in our history, we are afforded the opportunity to utilize alternative gaming as a means to strengthen the racetrack’s purse program.”

        Meeker added, “Now that we have completed the acquisition, we can turn 100 percent of our focus to the upcoming race meet. Our staff and Fair Grounds management have made great strides in recent weeks to prepare for this meet and the racetrack’s integration with CDI. We will concentrate on improving conditions in the stable area and creating marquee racing days that will showcase Louisiana racing at its finest. Most important, we will continue meeting with neighborhood, business and political leaders with a view toward building strong and lasting partnerships with the community.”

        In the related transactions, CDI acquired the assets of Finish Line, which consists primarily of five OTB facilities in the New Orleans area. CDI also acquired VSI, the owner and operator of more than 700 video poker machines in nine locations that include Fair Grounds, the racetrack’s five OTBs and three Finish Line OTBs. CDI acquired Finish Line and VSI for a total of $10.5 million.

        “These acquisitions provide CDI with existing OTBs and video poker operations as well as management expertise that will provide a seamless experience for our customers,” explained Meeker. “For the first time, Fair Grounds, Finish Line OTBs and VSI will have unified ownership, which we believe will bring operational synergies and efficiencies that will benefit our patrons and our Company.”

— MORE —

700 CENTRAL AVENUE o LOUISVILLE, KY 40208 o P: (502) 636-4400 o churchilldownsincorporated.com

Churchill Downs Incorporated Completes Fair Grounds Race Course And Related Acquisitions
Page 2
Oct. 15, 2004

        The Fair Grounds and related acquisitions increase CDI’s portfolio to seven racetracks and 22 OTBs in six states. CDI’s live racing operations are as follows: Arlington Park in Arlington Heights, Ill.; Calder Race Course in Miami; Churchill Downs in Louisville, Ky.; Ellis Park in Henderson, Ky.; Fair Grounds Race Course in New Orleans; Hollywood Park in Inglewood, Calif.; and Hoosier Park in Anderson, Ind.

        CDI’s financial advisor for the Fair Grounds and related acquisitions was Lazard. Legal advisors for CDI were Lemle & Kelleher L.L.P., Wyatt, Tarrant & Combs LLP, and Skadden, Arps, Slate, Meagher & Flom LLP.

        Churchill Downs Incorporated, headquartered in Louisville, Ky., owns and operates world-renowned horse racing venues throughout the United States. The Company’s seven racetracks in California, Florida, Illinois, Indiana, Kentucky and Louisiana host 123 graded-stakes events and many of North America’s most prestigious races, including the Kentucky Derby and Kentucky Oaks, Hollywood Gold Cup and Arlington Million. CDI racetracks have hosted nine Breeders’ Cup World Thoroughbred Championships – more than any other North American racing company. CDI also owns off-track betting facilities and has interests in various television production, telecommunications and racing services companies that support CDI’s network of simulcasting and racing operations. CDI trades on the Nasdaq National Market under the symbol CHDN and can be found on the Internet at www.churchilldownsincorporated.com.

        This news release contains forward-looking statements made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The reader is cautioned that such forward-looking statements are based on information available at the time and/or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements speak only as of the date the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Forward-looking statements are typically identified by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “should,” “will,” and similar words, although some forward-looking statements are expressed differently. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from our expectations include: the effect of global economic conditions; the effect (including possible increases in the cost of doing business) resulting from future war and terrorist activities or political uncertainties; the economic environment; the impact of increasing insurance costs; the impact of interest rate fluctuations; the financial performance of our racing operations; the impact of gaming competition (including lotteries and riverboat, cruise ship and land-based casinos) and other sports and entertainment options in those markets in which we operate; costs associated with our efforts in support of alternative gaming initiatives; costs associated with our Customer Relationship Management initiative; a substantial change in law or regulations affecting our pari-mutuel activities; a substantial change in allocation of live racing days; litigation surrounding the Rosemont, Illinois, riverboat casino; changes in Illinois law that impact revenues of racing operations in Illinois; a decrease in riverboat admissions subsidy revenue from our Indiana operations; the impact of an additional Indiana racetrack and its wagering facilities near our operations; our continued ability to effectively compete for the country’s top horses and trainers necessary to field high-quality horse racing; our continued ability to grow our share of the interstate simulcast market; our ability to execute our acquisition strategy and to complete or successfully operate planned expansion projects; our ability to adequately integrate acquired businesses; market reaction to our expansion projects; any business disruption associated with our facility renovations; the loss of our totalisator companies or their inability to keep their technology current; our accountability for environmental contamination; the loss of key personnel and the volatility of our stock price.

— END —