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

FORM 10-K

Commission File No. 000-30578

MAGNA ENTERTAINMENT CORP.
(Exact name of registrant as specified in its charter)

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

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ý    No o

As of June 30, 2004, the aggregate market value of the Class A Subordinate Voting Stock held by non-affiliates of the registrant was approximately $232,886,782 (based on the closing sale price of $5.90 per share of Class A Subordinate Voting Stock reported on The Nasdaq National Market on June 30, 2004, the last day of the registrant's most recently completed second quarter). As of June 30, 2004, non-affiliates held no shares of Class B Stock. There is no active market for such stock.

The number of shares of Class A Subordinate Voting Stock of the registrant outstanding as of March 9, 2005 was 48,878,796.

The number of shares of Class B Stock of the registrant outstanding as of March 9, 2005 was 58,466,056.

Documents Incorporated by Reference

Portions of the registrant's proxy statement (our "Proxy Statement") to be filed with the Securities and Exchange Commission ("SEC") pursuant to Regulation 14A within 120 days after the registrant's fiscal year end of December 31, 2004 are incorporated by reference in Part II, Item 5 and Part III of this Annual Report to the extent stated herein. The section entitled "Description of Debt Securities" in the prospectus included in the registrant's registration statement on Form S-3 (File number 333-107368), filed with the SEC on July 25, 2003 (and as amended on Form S-3/A on September 26 and September 30, 2003), is incorporated by reference into Part II, Item 5 of this Annual Report. Except with respect to information specifically incorporated by reference in this Annual Report, the documents incorporated by reference are not deemed to be filed as part hereof.

INDEX

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Part I
Item 1.    Business

Available Information

        The registrant files Annual Reports on Form 10-K and Current Reports on Form 8-K with the Securities and Exchange Commission. You may read and copy any materials the registrant files with the Securities and Exchange Commission at the Commission's Public Reference Room at 450 Fifth Street, NW, Washington, DC 20549. You may obtain information on the hours of operation of the Securities and Exchange Commission's Public Reference Room by calling the Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.

        The registrant maintains a website that contains information about the registrant, none of which is incorporated by reference in, or shall be deemed included in, this Annual Report. It is accessible at www.magnaentertainment.com. Through the registrant's website, stockholders and the general public may access free of charge (other than any connection charges from internet service providers) filings the registrant makes with the SEC as soon as reasonably practicable after filing. Filing accessibility in this manner includes this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to these reports filed with or furnished to the SEC. Information contained in or otherwise accessed through the registrant's website does not form part of this Annual Report. All such references to the registrant's website are inactive textual references only.

        In this Annual Report, when we use the terms "we", "us", "our", "MEC" and the "Company", we are referring to Magna Entertainment Corp. and its subsidiaries, unless the context otherwise requires. In this Annual Report, unless stated otherwise, all references to "$" are to U.S. dollars and all references to "Cdn. $" are to Canadian dollars.

Special Note Regarding Forward-Looking Information

        This Annual Report, including "Management's Discussion and Analysis of Results of Operations and Financial Position" in Item 7, contains "forward-looking statements" within the meaning of applicable securities legislation, including the Securities Act of 1933, as amended and the Securities and Exchange Act of 1934, as amended. These forward-looking statements may include, among others, statements regarding: our strategies and plans; expectations as to financing and liquidity requirements and arrangements; expectations as to operational improvements; expectations as to cost savings, revenue growth and earnings; the time by which certain objectives will be achieved; estimates of costs relating to environmental remediation and restoration; proposed new racetracks or other developments, products and services; expectations as to the timing and receipt of government approvals and regulatory changes in gaming and other racing laws and regulations; expectations that claims, lawsuits, environmental costs, commitments, contingent liabilities, labor negotiations or agreements, or other matters will not have a material adverse effect on our consolidated financial position, operating results, prospects or liquidity; projections, predictions, expectations, estimates or forecasts as to our financial and operating results and future economic performance; and other matters that are not historical facts.

        Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or the times at or by which such performance or results will be achieved. 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.

        Important factors that could cause such differences include, but are not limited to, the factors discussed below under "Our Business — Risk Factors" and our subsequent public filings.

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        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. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.

Incorporation and Corporate Structure

        We were incorporated on March 4, 1999 under the laws of the State of Delaware as MI Venture Inc. Our certificate of incorporation was amended by a certificate of amendment on August 30, 1999 to reclassify our Common Stock into Class A Common Stock and to add a new class of stock designated as Class C Common Stock. Our certificate of incorporation was further amended on November 4, 1999 to change our name to MI Entertainment Corp., add share provisions for our Class A Subordinate Voting Stock and Class B Stock, and reclassify and subdivide our issued and outstanding Class C Common Stock into Class B Stock. Our certificate of incorporation was further amended on January 26, 2000 to change our name to Magna Entertainment Corp. Our certificate of incorporation was further amended on February 29, 2000 to broaden our corporate purpose, clarify the attributes of our Class A Subordinate Voting Stock and Class B Stock, and implement our Corporate Constitution. Subsequently, our certificate of incorporation was restated on March 1, 2000 to consolidate all prior amendments.

        Our registered office is located at 1209 Orange Street, Wilmington, Delaware, 19801 and our principal executive office is located at 337 Magna Drive, Aurora, Ontario, Canada L4G 7K1.

OUR BUSINESS

        We own and operate horse racetracks in California, Florida, Maryland, Texas, Oklahoma, Pennsylvania, Ohio, Michigan, Oregon, Ontario, Canada and Ebreichsdorf, Austria. Based on revenues, we are North America's number one owner and operator of horse racetracks. Based on revenues, we are one of the world's leading suppliers, via simulcasting, of live racing content to the growing inter-track, off-track and account wagering markets. Throughout 2004, we operated or managed twelve thoroughbred racetracks, two standardbred (harness racing) racetracks, two racetracks that run both thoroughbred and standardbred meets and one greyhound racetrack, as well as the simulcast wagering venues at these tracks. Subsequent to December 31, 2004, we have ceased operations at one of our thoroughbred racetracks and at our only greyhound racetrack, which we operated in leased facilities under leases that were not renewed for 2005. In addition, we operate off-track betting ("OTB") facilities, a U.S. national account wagering business known as XpressBet®, which permits customers to place wagers by telephone and over the Internet on horse races at over 100 North American racetracks and internationally on races in Australia, South Africa and Dubai and a European-based account wagering business known as MagnaBet™. We also own and operate HorseRacing TV™ ("HRTV"™), a television network focused on horse racing that we initially launched on the Racetrack Television Network ("RTN"). We are in ongoing discussions with cable and satellite operators with the goal of achieving broader distribution for HRTV™. In July 2004, HRTV™ entered into a carriage agreement with the operator of the Dish Network™ that dramatically expanded HRTV™'s distribution throughout the United States. HRTV™ is currently distributed to more than 11 million cable and satellite TV subscribers. RTN, in which we have a minority interest, was formed to telecast races from our racetracks and other racetracks, via private direct-to-home satellite, to paying subscribers. In 2004, we launched RaceONTV™ in Europe to provide North American racing content from our racetracks and other U.S. racetracks that have agreed to participate in our international distribution network to locations outside North America. We also own a 30% equity interest in AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry. To support certain of our thoroughbred racetracks, we own and operate thoroughbred training centers situated near San Diego, California, in Palm Beach County, Florida and in the Baltimore, Maryland area. We also own and operate production facilities in Austria and in North Carolina for StreuFex™, a straw-based horse bedding product.

        We distribute our live racing content to approximately 1,000 off-track and inter-track venues, including other racetracks, OTB facilities and casinos in the United States, Canada, Mexico, Peru, the Caribbean, the United Kingdom, Germany and Austria. We intend to expand the distribution of this content in these markets and, to the extent permitted by various regulatory regimes, in additional markets, particularly emerging electronic media-based markets, such as wagering via interactive television and the Internet.

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        Since December 1998, we have acquired six large racetrack operations in North America: Santa Anita Park near Los Angeles, Gulfstream Park near Miami, Golden Gate Fields near San Francisco, Lone Star Park at Grand Prairie near Dallas, and The Maryland Jockey Club, which operates Laurel Park, situated between Washington, D.C. and Baltimore, and Pimlico Race Course in Baltimore, home of the Preakness Stakes®, the middle jewel in thoroughbred racing's Triple Crown. We have also acquired the racetrack operations of The Meadows near Pittsburgh, Thistledown near Cleveland, Remington Park in Oklahoma City, Great Lakes Downs in Muskegon, Michigan, Portland Meadows near Portland, Oregon and Flamboro Downs near Toronto, Canada. In April 2004, we opened our newest racetrack, Magna Racino™, which we built near Vienna, Austria, and features both standardbred and thoroughbred racing.

        These acquisitions have enabled us to secure the ownership rights to what we believe is some of the highest quality and most popular live horse racing content in North America, based on standard industry measures, such as total handle, average daily attendance and average daily wagering, both on and off-track. We believe that the aggregation of this high-quality content, combined with a strong branding strategy and the introduction of new media distribution technologies, will enhance the distribution of our content and help us develop new sources of revenues.

        We own all the land on which these racetracks are located, with the exception of Great Lakes Downs, Lone Star Park at Grand Prairie, Remington Park and Portland Meadows (in which we own a minority interest in the land).

        Until the end of 2004, we also operated the Bay Meadows thoroughbred racetrack near San Francisco and Multnomah Greyhound Park near Portland, Oregon under leases which expired at the end of 2004 and were not renewed.

        We have also applied for horse racing licenses in certain other jurisdictions, including the Detroit, Michigan area where we have proposed to develop a new racetrack, subject to regulatory and other approvals. In October 2003, a subsidiary of MI Developments Inc., purchased vacant land in Romulus, Michigan which may serve as the site of the proposed racetrack. MI Developments Inc. has granted us an option, exercisable at any time on or prior to June 30, 2005, to purchase the shares of its subsidiary, which holds the Romulus land. In addition, we are actively seeking a developer or strategic partner for the development of leisure and entertainment or retail-based real estate projects on the excess land surrounding, or adjacent to, certain of our premier racetracks.

        Initiatives related to the passage of legislation permitting alternative gaming at racetracks, such as slot machines, video lottery terminals ("VLTs") and other forms of non-pari-mutuel gaming, are actively underway in a number of states in which we operate. Alternative gaming legislation has passed in Pennyslvania and Oklahoma and there is a pending legislative initiative currently underway in Florida. In Pennsylvania, we intend to pursue a license to allow The Meadows to operate between 1,500 and 3,000 slot machines, subject to future expansion of up to 2,000 additional machines, as soon as practicable. In Oklahoma, new legislation was approved which will permit Remington Park to operate 650 electronic gaming machines, subject to increases of an additional 50 machines in each of the third and fifth years after the issuance of the applicable license. We intend to apply for the required license as soon as practicable. In Florida, Amendment 4 to the Florida State Constitution was approved, permitting the governing bodies of Broward and Miami-Dade counties to each hold a county-wide referendum on whether to authorize slot machines within existing, licensed pari-mutuel facilities that have conducted live racing during each of the last two years. A referendum was held in Broward County, where Gulfstream Park is located, on March 8, 2005. Based on preliminary unofficial results from the Broward County Supervisor of Elections announced on March 9, 2005, voters in Broward County have approved the referendum questions by majority vote, which means that slot machines are authorized at qualifying pari-mutuel facilities in Broward County, subject to the enactment of applicable legislation and licensing. Pursuant to Amendment 4, the state legislature is now required to adopt implementing legislation in the next regular legislative session, with an effective date no later than July 1, 2005.

        In addition to our racetracks, we own a significant real estate portfolio, which includes two golf courses and related recreational facilities as well as three residential developments in various stages of development in Austria, the United States and Canada. We are also working with potential developers and strategic partners for the development of leisure and entertainment or retail-based real estate projects on the excess land surrounding, or adjacent to, certain of our premier racetracks. We have entered into a predevelopment management agreement with Forest City Enterprises, Inc. concerning the proposed development of "The Village at Gulfstream Park™". Please see "Our Properties — Gulfstream Park". We have also entered into a letter of intent with Caruso Affiliate Holdings to explore the possibility of joint ventures to develop certain undeveloped lands surrounding our Santa Anita Park and Golden Gate Fields racetracks into retail and entertainment venues. Please see "Our Properties — Santa Anita Park" and "Our Properties — Golden Gate Fields".

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        Please see our financial statements beginning on page 82 for financial information concerning our business and segments, including a geographic breakdown of revenues and information concerning long-lived assets.

Our Strategy

        Since our inception in 1998, we have experienced significant growth through a strategic acquisition program. We intend to grow and develop our business further by:

Continuing to Integrate our Acquisitions by Employing "Best Practice" Improvements at our Racetracks

        Through our acquisitions, we own some of the largest and what we believe to be some of the highest-quality thoroughbred racetracks in North America, as measured in terms of total handle, average daily attendance and average daily wagering, both on and off-track. We believe that the increased scale and integration of our racetrack operations and related wagering operations will afford us the opportunity to both grow our revenues and achieve significant operational synergies through the implementation of best practices, cost reductions realized from economies of scale and increased efficiencies. We intend to improve the quality of the live racing experience for our customers and horsemen by upgrading and expanding our physical facilities, technology and business processes in order to attract more customers and the best available horses, trainers and jockeys. In furtherance of this strategy, we formed our Continuous Improvement Team, which since late 2003 has been evaluating and implementing best practices at our racetracks, resulting in significant cost savings and operating efficiencies.

Further Developing Our Off-Track and In-Home Simulcasting and Wagering Services

        We intend to continue our efforts to combine our racing content, and the racing content from racetracks not owned by us, and market this content to the in-home and off-track market. We believe that aggregating this content provides us significant leverage to generate increased revenues and economies of scale to utilize cost-effective delivery systems. We believe that packaging our product this way will increase the exposure of our racetracks as well as racetracks owned by others and expand our customer base. For the in-home market, we offer account wagering on over 100 North American racetracks via the Internet and by telephone through XpressBet®. Horse racing fans can also watch live racing contest from all over the United States on HorseRacing TV™, our specialty television network focused on horse racing that is distributed to more than 11 million cable and satellite television subscribers. We also operate a significant number of OTBs in various markets.

Entering New Markets

        We currently distribute our content to inter-track and off-track venues in the United States, Canada, Mexico, Peru, the Caribbean, the United Kingdom, Germany and Austria. In April 2004, we opened our newest racetrack, Magna Racino™, which features both thoroughbred and standardbred racing. We also launched MagnaBet™, our international account wagering service (currently operating in Austria, Great Britain and Germany) in 2004. RaceONTV™, our international simulcast distribution service, was also launched in 2004 and now offers North American racing content to customers in Austria, Germany and Peru. We believe that, subject to applicable regulation, significant opportunities exist to expand the distribution of our content through the further development of our international distribution network. We believe that we have a strong business plan for these services that has been augmented by the recent agreement with Churchill Downs, Inc. to offer combined MEC and Churchill Downs signals outside of North America.

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Obtaining Broader Distribution of HorseRacing TV™

        We believe that broad television distribution will help increase future interest in horse racing and attract additional wagering customers. At present, HorseRacing TV™ is carried on cable in 15 states and is available nationally on Dish Network™ as well as RTN. In an effort to broaden the audience, reach and appeal of horse racing and wagering thereon, we are pursuing carriage agreements with additional cable and satellite operators to achieve expanded distribution of HorseRacing TV™ in North America.

Improving the Quality of the Entertainment Experience and Facilities at Certain of Our Racetracks

        In order to increase our customer base, we intend to improve the quality of the entertainment experience at our racetracks by offering a variety of experiences with horseracing as the feature attraction. In pursuit of this strategy, we have begun and intend to continue to redevelop and modernize our facilities. In 2004, we commenced the redevelopment of Gulfstream Park, located just outside Miami, Florida. This redevelopment includes the construction of new wider and longer racing surfaces, which allow Gulfstream Park to run a longer live racing season and offer larger field sizes as well as a new grandstand/entertainment facility, each of which we expect to result in greater attendance and handle.

Adding Alternative Gaming, if Permitted, at Certain of Our Racetracks

        In order to broaden our market appeal and thereby increase attendance and revenues, we intend to pursue alternative gaming opportunities, where available. Alternative gaming legislation that authorizes slot machines, video lottery terminals (VLTs) or electronic gaming at certain designated locations has been approved in Oklahoma, where our Remington Park racetrack is located, and Pennsylvania, where our racetrack The Meadows is located. We intend to apply for licenses and build the necessary facilities to operate slot machines or electronic gaming at Remington Park and The Meadows as soon as practicable. Alternative gaming legislation is also being seriously considered in other states in which we operate pari-mutuel facilities and if such legislation is approved, we intend to apply for the applicable licenses and build the necessary facilities as soon as practicable.

Developing Our Significant Real Estate Assets

        We have a significant portfolio of high quality real estate located in densely populated urban markets. Included in this real estate portfolio is land adjacent to several of our racetracks, Santa Anita Park, Gulfstream Park, Lone Star Park at Grand Prairie, Laurel Park and Magna Racino™. We are considering a variety of options with respect to this land, including entertainment and retail-based developments that could be undertaken in conjunction with business partners who could be expected to provide the necessary marketing and development expertise, as well as the necessary financing. In pursuit of this strategy, we have entered into a predevelopment management agreement with Forest City Enterprises, Inc. concerning the proposed development of a combined retail and entertainment development, featuring Gulfstream Park as its cornerstone entertainment feature. We have also entered into a letter of intent with Caruso Affiliate Holdings to explore the possibility of joint ventures to develop certain undeveloped lands surrounding our Santa Anita Park and Golden Gate Fields racetracks into retail and entertainment venues.

Selectively Acquiring and Developing Additional Content

        We will selectively pursue the acquisition and development of strategically important, geographically diverse racetracks and content in order to increase our distribution of live racing content. We intend to simulcast this content to other pari-mutuel wagering venues and to increase both the number of days in the year and hours in the day that we offer wagering on live and simulcast races.

Our History

        Our original parent company, Magna International Inc., is one of the most diversified automotive parts suppliers in the world. In 1999, Magna International Inc. entered into a series of transactions in order to separate its non-automotive businesses from its automotive businesses.

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        We were incorporated in Delaware on March 4, 1999. In November 1999, Magna International Inc. completed a reorganization of its corporate structure, under which Magna International Inc.'s non-automotive businesses and certain real estate assets were transferred to us. As part of this reorganization, our capital structure was amended to establish two classes of stock: Class A Subordinate Voting Stock, with one vote per share, and Class B Stock, with 20 votes per share.

        On March 10, 2000, Magna International Inc. distributed to holders of its Class A subordinate voting shares and Class B shares, by way of a special dividend, approximately 15.7 million shares composed of our Class A Subordinate Voting Stock and exchangeable shares of MEC Holdings (Canada) Inc. Each exchangeable share was exchangeable by the holder for one share of our Class A Subordinate Voting Stock at any time. The purpose of these shares was to permit certain Canadian shareholders of Magna International Inc. that were subject to limitations on their holdings of shares of non-Canadian issuers to receive shares of a Canadian issuer in the special dividend by Magna International Inc. described above. On December 30, 2002, all remaining exchangeable shares of MEC Holdings (Canada) Inc., other than those already owned by us, were purchased by us in exchange for shares of our Class A Subordinate Voting Stock on a one-for-one basis.

        On August 19, 2003, the shareholders of Magna International Inc. approved the spin off of its wholly-owned subsidiary, MI Developments Inc. As a result of the spin off transaction, MI Developments Inc. acquired Magna International Inc.'s controlling interest in MEC.

        MI Developments Inc. is a real estate operating company engaged in the ownership, development, management, leasing, acquisition and expansion of industrial and commercial real estate properties located in Canada, Europe, the United States and Mexico. Virtually all of MI Development Inc.'s income-producing properties are under long-term leases to Magna International Inc. and its subsidiaries.

        As of March 9, 2005, MI Developments Inc. owns, directly or indirectly, all of our outstanding Class B Stock and 4,362,328 shares of our Class A Subordinate Voting Stock. As a result, MI Developments Inc. is able to exercise approximately 96% of the total voting power attached to all of our outstanding stock, and therefore is able to elect all of our directors and to control us. Each company has its own board of directors and management team, although we share the same Chairman. In addition, our Board of Directors has established a committee of independent directors to whom they have delegated the responsibility of reviewing any proposed related party transactions, including any proposed transactions between us and MI Developments Inc. or between us and our original parent company, Magna International Inc.

Overview of the Horse Racing Industry

Pari-Mutuel Wagering

        Pari-mutuel wagering on horse racing is a form of wagering in which wagers on horse races are aggregated in a commingled pool of wagers, called a mutuel pool, and the payoff to winning customers is determined by both the total dollar amount of wagers in the mutuel pool and the allocation of those dollars among the various kinds of bets. Unlike casino gaming, the customers bet against each other, and not against the operator, and therefore the operator bears no risk of loss with respect to any wagering conducted. The pari-mutuel operator retains a pre-determined percentage of the total amount wagered, called the takeout, on each event, regardless of the outcome of the wagering event, and the remaining balance of the mutuel pool is distributed to the winning customers. Of the percentage retained by the pari-mutuel operator, a portion is paid to the horse owners in the form of purses or winnings, which encourage the horse owners and their trainers to enter their horses in a track's races. Pari-mutuel wagering on horse racing is the largest form of pari-mutuel wagering, and it is currently authorized in over 40 states of the United States, all provinces of Canada and approximately 100 other countries around the world.

Recent History

        Over the past 20 years, live attendance at horse racetracks in the United States has declined substantially due to a number of factors, including the growth in off-track wagering; increased competition from other forms of gaming and leisure entertainment; the attrition of the racing industry's traditional customer base; the lack of, or deterioration in, the quality of live racing events at many racetracks; and the inability of racetrack operators to broaden the appeal of wagering on horse racing. Declines in live attendance have resulted in an overall decline in the amount of money wagered on-track on horse racing, which has exacerbated the problem of producing high-quality live wagering events and in developing entertaining racetrack facilities.

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        In the early 1990s, the introduction of off-track and inter-track wagering became more prevalent and reversed the decline in the total amount of dollars wagered on horse racing. The rise of off-track and inter-track wagering has resulted in an increase in total industry revenues, and the creation of larger pools of wagers on horse races at certain racetracks. This has more than offset the decline in live on-track wagering due to declining live attendance.

The Growth in Off-track and Inter-track Wagering

        Pari-mutuel wagering on thoroughbred horse racing in the United States increased from $9.9 billion in 1994 to $15.1 billion in 2004, according to The Jockey Club. This increase resulted primarily from the growth of off-track and inter-track wagering, which has grown by approximately 52% from $8.7 billion in 1996 to $13.2 billion in 2004. Simulcasting live racing events to off-track and inter-track venues has been facilitated by technological advances and the introduction of legislative changes.

U.S. Thoroughbred Pari-Mutuel Wagering Handle (in Billions)

*

Not available

Source: Equibase Company LLC; The Jockey Club.

        Simulcasting is the process of transmitting the audio and video signal of a live racing performance, referred to as the content, from one facility to other locations or venues where wagering on such content is permitted. Simulcasting provides racetracks with the opportunity to increase revenues by exporting their live racing content to as many wagering locations as possible, such as other racetracks, OTB facilities and casinos, and by importing racing content from other racetracks.

        Revenues are increased because simulcasting provides racetracks that export their live content with additional customers in multiple locations who would not have otherwise been able to place wagers on the live racing event. Similarly, simulcasting provides operators of wagering venues who import content from other racetracks with more product upon which their customers can place wagers. Providers of live racing content who export their content to other venues generally charge these venues a percentage of all monies wagered on their content, while operators of pari-mutuel wagering venues that import racing content retain a pre-determined percentage of all amounts wagered at their facility on the imported content. Because the competition for time slots is relatively intense, the growth of simulcasting has been particularly beneficial to the operators of premier racetracks, which tend to offer higher quality racing, with larger fields and higher purses. Conversely, operators of smaller or lesser quality racetracks have historically benefited less from export simulcasting of their content, due to a lack of demand for their content. Part of our strategy involves efforts to broaden the distribution of, and demand for, the racing content from our smaller tracks.

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        We expect that off-track and inter-track wagering will experience continued growth as additional venues able to import simulcast content are established and new distribution channels for pari-mutuel wagering, such as the telephone, Internet and interactive television, are further developed.

        Because of the high quality of our thoroughbred racing content and racetrack properties, we believe we are well positioned to participate in the future growth of off-track, inter-track and account wagering as both a leading exporter and importer of live racing content.

Our Content

        Our racetracks are geographically diversified. Santa Anita Park is near Los Angeles, Gulfstream Park is near Miami, Golden Gate Fields is near San Francisco, Lone Star Park at Grand Prairie is near Dallas, Pimlico Race Course is in Baltimore, Laurel Park is between Washington, D.C. and Baltimore, The Meadows is near Pittsburgh, Thistledown is near Cleveland, Remington Park is in Oklahoma City, Flamboro Downs is near Toronto, Canada, Great Lakes Downs is in Muskegon, Michigan, and Portland Meadows and is near Portland, Oregon. Colonial Downs, whose racing operations we manage, is in New Kent, Virginia. Maroñas, a racetrack to which we provide management services, is in Montevideo, Uruguay. Our newest racetrack, Magna Racino™, is located near Vienna, Austria.

2005 Racing Schedule

        As illustrated in the chart below, live racing is offered throughout the year at our racetracks. The racing dates for Santa Anita Park indicated below include The Oak Tree Meet.

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*

Owned by a third party; the racing and pari-mutuel operations of Colonial Downs are managed by The Maryland Jockey Club.

Our Properties

        Set forth below is a description of certain of our properties.

Santa Anita Park

        Santa Anita Park is situated on approximately 305 acres of land in the City of Arcadia, California, approximately 14 miles northeast of Los Angeles. Approximately 10.9 million people are located within a 30-mile radius of Santa Anita Park.

        Santa Anita Park opened for thoroughbred horse racing in 1934 and hosts The Santa Anita Meet. The Santa Anita Meet generally commences on December 26 and runs until mid-April each year. In addition, we lease Santa Anita Park to The Oak Tree Racing Association, which is an unaffiliated not-for-profit California association that holds a license to host The Oak Tree Meet for five to six weeks each fall. Pursuant to this lease, we receive rent that consists primarily of a percentage of the on-track handle wagered on races run at Santa Anita Park and a percentage of The Oak Tree Racing Association net commissions from fees earned on racing content, exported from or imported to Santa Anita Park. Santa Anita Park was the site of the Breeders' Cup™ World Thoroughbred Championships in 2003 during The Oak Tree Meet. Santa Anita Park has one of the longest racing schedules of the top North American racetracks, totaling approximately 110 to 115 racing days each year (including The Oak Tree Meet). Average daily attendance in 2004 was approximately 9,000 customers per live racing day, representing one of the highest average daily attendance figures of all North American racetracks.

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        Santa Anita Park had one of the highest total handles, or total amounts wagered, of all North American racetracks in 2004, approximately $1.253 billion, including wagers made at Santa Anita Park on its races (including The Oak Tree Meet), wagers made at other wagering venues and through various account wagering operations on Santa Anita Park's races (excluding wagers placed in Northern California and via account wagering systems licensed to operate in California), and wagers made at Santa Anita Park and its inter-track facilities on imported races. Wagers on Santa Anita Park's races (including The Oak Tree Meet and all venues at which wagers were placed) totaled approximately $851.8 million in 2004. Of this amount, approximately $693.7 million in wagers were placed at other wagering venues to which we exported Santa Anita Park's races via simulcast and through various account wagering operations. Santa Anita Park exports its simulcast signal to approximately 1,000 off-track and inter-track wagering facilities in 23 countries. Throughout the year, Santa Anita Park operates as an inter-track wagering facility where customers can wager on races that are imported to Santa Anita Park from other racetracks.

        Santa Anita Park's facilities include a large art deco-style grandstand structure with seating for approximately 19,000 customers, as well as standing room for additional customers, a one-mile oval dirt track as well as a ⁷/8-mile turf course, stalls for approximately 2,000 horses and parking facilities sufficient to accommodate approximately 17,000 cars.

        In December 1999, we completed a $45.0 million capital renovation program at Santa Anita Park, which included the development of a new 750-seat high-end restaurant, the installation of a 2,120 square foot LED screen in the infield track area for racing customers and other upgrades to the grandstand, the track and other areas of the facility.

        In January 2004, we completed certain renovation and improvement projects that included the opening of Sirona's™, a 25,000 square foot sports bar and restaurant located across from the walking ring. Sirona's™ will operate year-round from an open-air terrace overlooking a seven acre garden paddock. After-race activities feature a weekly musical concert from its garden stage. Other enhancements include two new customer convenient food service facilities in our front garden, eight high definition video projection systems in our major betting halls, two LED screens flanking our walking ring, and the extensive landscaping and lighting of our main entry and south parking lot.

        We are considering a variety of retail-based development proposals for our excess real estate at Santa Anita Park. This development would be intended to further enhance the entertainment experience at Santa Anita Park, broaden the demographic composition of our customer base and strengthen the loyalty of existing customers. These proposals are preliminary. If, after a detailed review, we decide to proceed with such proposals or alternative proposals, additional time would be required to obtain or finalize the necessary regulatory approvals and negotiate with potential business partners who could be expected to provide marketing and development expertise and the necessary financing.

        In April 2004, we signed a letter of intent to explore the possibility of joint ventures between Caruso Affiliate Holdings and various MEC affiliates to develop certain undeveloped lands surrounding Santa Anita Park and Golden Gate Fields. We are continuing to explore these developmental opportunities but we have not yet entered into definitive agreements regarding either of these potential developments. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations — 2004 Developments and Initiatives."

Gulfstream Park

        Gulfstream Park is located on approximately 255 acres of land in the cities of Hallandale and Aventura, between Miami and Ft. Lauderdale in Florida. There are approximately 4.3 million people living within a 40-mile radius of Gulfstream Park.

        Gulfstream Park opened in 1939 and for many years, ending in 2001, the annual meet at Gulfstream Park lasted for approximately 63 days between January and March. Beginning in 2002, Gulfstream Park was granted approval to run its meet for approximately 90 days between January and April. The Breeders' Cup™, one of the preeminent series of races in the United States, was held at Gulfstream Park in 1989, 1992 and 1999. Average daily attendance in 2004 was approximately 8,600 customers per live racing day.

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        In 2004, we initiated a redevelopment of Gulfstream Park, including new dirt and turf racetracks, a new grandstand and entertainment facility and new backstretch facilities. The redevelopment required us to demolish Gulfstream Park's existing grandstand, club house and racetracks. Under our current temporary structures we have seating under roof and air for approximately 2,400 patrons. Gulfstream Park currently has parking capacity for 8,000 cars and has stalls for 1,140 horses. We have just completed and opened the new dirt and turf racetracks in the fourth quarter of 2004, which feature a 1¹/8-mile main track and a one-mile turf course. We anticipate completing the new grandstand and entertainment facility and the backstretch facilities in time for our meet beginning in January 2006.

        Gulfstream Park had total handle during 2004 of approximately $823.3 million, which includes wagers made at Gulfstream Park on its races, wagers made on Gulfstream Park races at other wagering venues and through various account wagering operations, and wagers made at Gulfstream Park on races imported to its inter-track facility. Wagers on Gulfstream Park's races totaled approximately $710.6 million in 2004. Of this amount, approximately $622.5 million in wagers were placed at other wagering venues to which we exported Gulfstream Park's signal and through various account wagering operations.

        In April 2004, we entered into a predevelopment management agreement with Forest City Enterprises, Inc. concerning the proposed development of "The Village at Gulfstream Park™", an 80-acre, mixed-use retail, entertainment and residential project proposed to be built adjacent to Gulfstream Park. The proposed first phase of The Village at Gulfstream Park™ is a unique integration of a state-of-the-art lifestyle shopping and entertainment environment with Gulfstream Park that is expected to incorporate approximately 600,000 square feet of lifestyle retail shops, restaurants, cinema and entertainment facilities, including some of the most unique and sought-after national and local tenants. The proposed second phase of the Village at Gulfstream Park™ is to incorporate a unique residential village overlooking the picturesque Gulfstream Park racetrack, Florida's inner-coastal waterway and the Atlantic Ocean beyond. Future phases also anticipate a hotel and commercial office space. Under the predevelopment management agreement, Forest City will manage the development of The Village at Gulfstream Park™, secure financing for the project and act as the property manager. Each of Forest City and MEC will hold a 50% interest in the joint venture, which will lease the land underlying the retail project on a long-term basis from MEC. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations — 2004 Development and Initiative".

Golden Gate Fields

        Golden Gate Fields is located on approximately 154 acres of land in the cities of Albany and Berkeley, California, approximately eight miles from Oakland and approximately 11 miles from San Francisco. There are approximately 5.2 million people within a 40-mile radius of Golden Gate Fields. In December 2003, we closed the sale of approximately 16 acres of excess real estate located at Golden Gate Fields, located on the Berkeley side of the property, to the East Bay Regional Park District (see "— Our Real Estate Portfolio").

        Golden Gate Fields' racing season lasts for approximately 103 racing days. The season runs in the fall through the end of January. From the end of December to the close of the season, Golden Gate Fields operates simultaneously with Santa Anita Park. Average daily attendance in 2004 was approximately 2,300 customers per live racing day.

        Golden Gate Fields had one the highest total handle of all North American racetracks in 2004, approximately $501.2 million, including wagers made at Golden Gate Fields on its races, wagers made at other wagering venues and through various account wagering systems on Golden Gate Fields' races (excluding wagers placed in Southern California, and wagers placed via advanced deposit wagering systems licensed to operate in California) and wagers made at Golden Gate Fields and its inter-track facilities on imported races. Wagers on Golden Gate Fields' races totaled approximately $289.7 million in 2004. Of this amount, approximately $261.1 million in wagers were placed at other wagering venues to which we exported Golden Gate Fields' races via simulcast and through various account wagering operations. Golden Gate Fields exports its simulcast signal to approximately 900 off-track and inter-track wagering facilities in the United States, Canada, Mexico and the Caribbean. Throughout the year, Golden Gate Fields operates as an inter-track wagering facility where customers can wager on races that are imported from other racetracks.

        Golden Gate Fields' facilities include a one-mile track and a ⁷/8-mile turf course, stalls for over 1,350 horses, a main grandstand with seating for approximately 8,000 customers, a Clubhouse with seating for approximately 4,500 customers, a Turf Club with seating for approximately 1,200 customers and parking for over 8,500 cars.

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        We are considering retail-based development proposals at Golden Gate Fields. This development would be intended to further enhance the entertainment experience at Golden Gate Fields, broaden the demographic composition of our customer base and strengthen the loyalty of our existing customers. These proposals are preliminary. If, after a detailed review, we decide to proceed with such proposals or alternative proposals, additional time would be required to obtain or finalize the necessary regulatory approvals and negotiate with potential business partners who could be expected to provide marketing and development expertise and the necessary financing.

        In April 2004, we signed a letter of intent to explore the possibility of joint ventures between Caruso Affiliate Holdings and various MEC affiliates to develop certain undeveloped lands surrounding Santa Anita Park and Golden Gate Fields. We are continuing to explore these developmental opportunities but we have not yet entered into definitive agreements regarding either of these potential developments. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations — 2004 Developments and Initiatives."

Laurel Park

        On November 27, 2002, we acquired a controlling interest in The Maryland Jockey Club, which owns and operates Laurel Park and Pimlico Race Course, and manages Colonial Downs. Laurel Park, which first appeared on the racing scene in 1911, is located on approximately 236 acres of land in Laurel, Maryland, between Washington, D.C. and Baltimore. There are approximately 6.6 million people living within a 40-mile radius of Laurel Park.

        Laurel Park's racing season in 2004 was 58 days compared to 142 racing days in 2003 due to the rebuilding of the racing surfaces at Laurel Park. Live thoroughbred racing is generally conducted at Laurel Park from the end of Pimlico's fall meet in early October to the end of March, when Pimlico opens for its spring meet. Historically racing then would resume at Laurel Park in late July for a four-week summer meet, but due to the rebuilding of the racing surfaces at Laurel Park, Pimlico Race Course continued racing live through the end of the year in 2004. Average daily attendance at Laurel Park in 2004 was approximately 3,000 customers per live racing day.

        Laurel Park's handle was approximately $281.5 million in 2004, including wagers made at Laurel Park on its races, wagers made at other wagering venues and through various account wagering operations on Laurel Park's races, and wagers made at Laurel Park on imported races. Wagers on Laurel Park's races totaled approximately $137.2 million in 2004. Of this amount, approximately $127.1 million in wagers were placed at other wagering venues to which we exported Laurel Park's signal via simulcast and through various account wagering operations.

        Laurel Park's facilities include a grandstand with seating for approximately 5,200 customers and a new 1¹/8-mile dirt track with a seven and one half-furlong chute which opened in January 2005. We are currently in the process of building a new ⁷/8-mile turf course at Laurel Park, which we anticipate will open in the third quarter of 2005. Laurel Park has stalls for approximately 1,000 horses and parking facilities sufficient to accommodate approximately 8,000 cars.

        We are considering a redevelopment of the entire stable area at Laurel Park. In the event this redevelopment project proceeds as currently contemplated, it will include the construction of new barns, dormitories and grooms' quarters. Please see "— Risk Factors — If we decide to proceed with redevelopment projects at any of our racetracks, we may need to write down the value of certain assets and will likely suffer a temporary disruption of our racing operations."

Lone Star Park at Grand Prairie

        On October 23, 2002, we acquired Lone Star Park at Grand Prairie ("Lone Star Park"), which operates thoroughbred and American quarter horse meets and is located on approximately 285 acres of land in the City of Grand Prairie, Texas, approximately 12 miles west of Dallas. There are approximately 5.1 million people living within a 40-mile radius of Lone Star Park.

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        Lone Star Park is one of the newest horse racing facilities in the United States, having opened for live thoroughbred and quarter horse racing in 1997. Lone Star Park's thoroughbred meet generally commences each year in early April and continues through mid-July. Its quarter horse meet generally commences each year in early October and continues through November; however, it was superseded in 2004 by a special thoroughbred meet which ran for 19 days in October, including the 2004 Breeders' Cup™ World Thoroughbred Championships on Saturday, October 30. Average daily attendance during the 2004 spring thoroughbred meet was approximately 8,400 customers per live race day and 7,400 customers (excluding Breeders' Cup) in the fall. In addition to its live racing facilities, Lone Star Park contains a state-of-the-art 36,000 square foot simulcast pavilion, which operates year-round.

        Lone Star Park had total handle during 2004 of approximately $360.8 million (excluding Breeders' Cup), which includes wagers made at Lone Star Park on its races, wagers made on Lone Star Park races at other wagering venues and through various account wagering operations, and wagers made at Lone Star Park on races imported to its inter-track facility. Wagers on Lone Star Park's races totaled approximately $180.6 million (excluding Breeders' Cup) in 2004. Of this amount, approximately $137.2 million in wagers were placed at other wagering venues to which we exported Lone Star Park's signal and through various account wagering operations.

        Lone Star Park's facilities include a grandstand with seating for approximately 10,000 customers, a one-mile dirt track, a ⁷/8-mile turf track, stalls for approximately 1,600 horses and parking facilities sufficient to accommodate approximately 10,000 cars. In addition to its grandstand, clubhouse and turf club seating, Lone Star Park has two floors of luxury suites. Lone Star Park's simulcast pavilion can also accommodate 2,110 customers.

        Lone Star Park was the site of the 2004 Breeders' Cup™ World Thoroughbred Championships, making it the youngest track in history to host this prestigious event. An overwhelming response from racing fans from around the world resulted in the fastest sellout in Breeders' Cup history with a total attendance of 53,717 on race day. Four major Breeders' Cup wagering records were established: $120,863,117 for all sources on the 12-race program; $109,838,668 for all sources on the eight Breeders' Cup races; $107,536,392 for total simulcast handle; and $16,401,762 for international simulcast handle.

        Lone Star Park is operated pursuant to a lease with a governmental entity associated with the City of Grand Prairie. The lease expires in 2027, at which time we will have an option to purchase the Lone Star Park real property at a purchase price equal to one-half of its then fair market value. Pursuant to the lease terms, if we exercise the option, we will receive credit against the purchase price in an amount equal to the sum of all rent payments made during the life of the lease discounted back to 1997 at a rate of 8% per annum.

Pimlico Race Course

        Historic Pimlico Race Course, home of the Preakness Stakes®, first opened its doors in 1870, making it the second oldest racetrack in the United States. Pimlico is situated on approximately 116 acres of land in Baltimore, approximately 30 miles from Laurel Park. There are approximately 5.2 million people living within a 40-mile radius of Pimlico.

        The Preakness Stakes® dates back to 1873, two years before the first Kentucky Derby was run. Since 1909, the Preakness Stakes® has been run annually at Pimlico without interruption and this year's race, on May 21, 2005, will mark the 130^th edition of this sporting classic. Past winners of the Preakness Stakes® include legendary race horses such as Man o' War, Citation, Secretariat, Seattle Slew and Affirmed.

        The racing season at Pimlico generally consists of approximately 70 racing days, its Spring meet, between early April and mid-June and a Fall meet in September. Historically, after its Spring meet, racing then would resume at Laurel Park in late July for a four-week summer meet, but due to the rebuilding of the racing surfaces at Laurel Park, Pimlico Race Course continued racing live through the end of the year in 2004. The Spring meet features 10 graded stakes races, including the middle jewel of thoroughbred racing's Triple Crown, the Preakness Stakes®, which is run annually on the third Saturday of May. Average daily attendance in 2004 was approximately 3,000 customers per live racing day.

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        Pimlico's handle was approximately $432.1 million in 2004, including wagers made at Pimlico on its races, wagers made at other wagering venues and through various account wagering operations on Pimlico's races, and wagers made at Pimlico on imported races. Wagers on Pimlico's races totaled approximately $332.2 million in 2004. Of this amount, approximately $306.1 million in wagers were placed at other wagering venues to which its signal was exported via simulcast and through various account wagering operations.

        Pimlico's facilities include a grandstand with seating for approximately 13,000 customers, a one-mile dirt track with 1³/16-mile and ³/4-mile chutes, a ⁷/8-mile turf course, stalls for approximately 700 horses and parking facilities sufficient to accommodate approximately 3,500 cars.

The Meadows

        We acquired The Meadows racetrack, which was our first standardbred (harness racing) track, in April 2001. It is located in Meadow Lands, Pennsylvania, in the greater Pittsburgh area, on approximately 155 acres of land. There are approximately 2.8 million people living within a 50-mile radius of The Meadows.

        The Meadows first opened in 1963 and has a year-round racing schedule encompassing approximately 206 live racing days. As part of this acquisition, we also acquired four OTB facilities in the greater Pittsburgh area, located in New Castle, Harmar Township, Moon Township and West Mifflin. In 2004, The Meadows opened its fifth OTB in Greensburg.

        The Meadows' facilities include a grandstand with seating for approximately 5,000 customers, a ⁵/8-mile harness track, stalls for approximately 990 horses and parking facilities to accommodate approximately 3,000 cars. The Meadows' OTB facilities each contain a restaurant and bar and offer wagering on simulcast races from racetracks across the country.

        The Meadows and its associated OTB facilities generated approximately $238.0 million in handle in 2004, including wagers made at The Meadows on its races, wagers made at other wagering venues and through various account wagering operations on The Meadows' races, wagers made at The Meadows on races imported to its inter-track facilities and wagers made at The Meadows' associated OTB facilities. Wagers on The Meadows' races (including all venues at which the wagers were placed) totaled approximately $100.3 million in 2004. Of this amount, approximately $92.7 million in wagers were placed at other wagering venues to which we exported The Meadows' races via simulcast and through various account wagering operations. The Meadows exports its simulcast signal to approximately 240 off-track and inter-track wagering facilities in the United States, Canada and the Caribbean. Throughout the year, The Meadows operates as an inter-track wagering facility where customers can wager on races that are imported to The Meadows from other racetracks.

        In July 2004, legislation was enacted in Pennsylvania that entitles The Meadows to apply for a license to operate between 1,500 and 3,000 slot machines, subject to future expansion of up to 2,000 additional slot machines upon certain conditions being met. We intend to pursue a license to operate slot machines at The Meadows as soon a practicable. See "— Government Regulation — Alternative Gaming — Pennsylvania". In the event that we obtain a license to operate slot machines at The Meadows, we plan to redevelop certain facilities at The Meadows. In the event that this project proceeds as currently contemplated, it will include the construction of a new clubhouse/grandstand/slot facility and related site works. Please see "— Risk Factors — Redevelopment projects at our racetracks, may result in a write down of the value of certain assets and have caused and may continue to cause temporary disruptions of our racing operations."

Thistledown

        Thistledown is located on approximately 128 acres in North Randall, Ohio, approximately 10 miles southeast of downtown Cleveland. There are approximately 3.0 million people living within a 40-mile radius of Thistledown.

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        Thistledown has one of the longest racing seasons of all North American thoroughbred racetracks, consisting of approximately 188 racing days between March and December. Thistledown hosts the Summit, Thistledown, Randall and Cranwood meets. Annually, Thistledown hosts the Ohio Derby, which is the premier graded stakes race in Ohio.

        Thistledown's handle was approximately $224.7 million in 2004, including wagers made at Thistledown on its races, wagers made at other wagering venues and through various account wagering operations on Thistledown's races, and wagers made at Thistledown on races imported to its inter-track facilities. Wagers on Thistledown's races (including all venues at which wagers were placed) totaled approximately $134.5 million in 2004. Of this amount, approximately $109.3 million in wagers were placed at other wagering venues to which we exported Thistledown's races via simulcast and through various account wagering operations. Thistledown exports its simulcast signal to as many as 650 off-track and inter-track wagering facilities in the United States. Throughout the year, Thistledown operates as an inter-track wagering facility where customers can wager on races that are imported to Thistledown from other racetracks.

        Thistledown's facilities include a grandstand with seating for approximately 8,000 customers, a luxury suite for corporate and group events, a one-mile oval track, stalls for approximately 1,500 horses and parking for approximately 6,000 cars.

Flamboro Downs

        We acquired Flamboro Downs racetrack, our second standardbred track, in April 2003. Flamboro Downs is located in the greater Hamilton area, approximately 40 miles outside Toronto, Canada, on approximately 235 acres of land. There are approximately 3.5 million people living within a 40-mile radius of Flamboro Downs.

        Flamboro Downs first opened in April 1975, and is a year-round harness racing facility. Flamboro schedules approximately 260 live racing days per year, and is open 365 days of the year offering live harness racing and simulcasting on both thoroughbred and harness racing.

        The Flamboro Downs facility includes a grandstand with seating for approximately 2,400 people, the Top O' The Turn dining room (300 capacity), the Pavilion restaurant which seats approximately 220, parking for approximately 2,500 vehicles, a ¹/2 -mile racing track, a ¹/2 -mile training track and stalls for approximately 630 horses contained in eight barns.

        Flamboro Downs also currently operates four OTBs in its market area. All four OTB operations are housed within sports bars and entertainment facilities operated by third parties that offer food and beverage service.

        Flamboro Downs and its associated OTB facilities generated approximately $102.8 million in handle in 2004, including wagers made at Flamboro Downs on its live races, wagers made at other wagering venues and through various account wagering operations on Flamboro Downs live races, wagers made at Flamboro Downs on races imported to its inter-track facilities and wagers made at Flamboro Downs associated OTB facilities. Wagers on Flamboro Downs races (including all venues at which the wagers were placed) totaled approximately $65.8 million in 2004. Of this amount, approximately $59.2 million in wagers were placed at other wagering venues to which we exported Flamboro Downs' live races via simulcast and through various account wagering operations. Flamboro Downs exports its simulcast signal to approximately 210 off-track and inter-track wagering facilities in Canada and the United States. Flamboro Downs racetrack also operates as an inter-track wagering facility where customers can wager on races that are imported to Flamboro Downs from other racetracks.

        Flamboro Downs houses a gaming facility with 750 video lottery terminals, or VLTs, owned and operated by the Ontario Lottery and Gaming Corporation ("OLGC"). Pursuant to a prescribed lottery scheme site holder facilities agreement with the OLGC, Flamboro Downs retains 20% of the "net win" (VLT revenue minus payouts to VLT players), with one-half of that amount distributed to the horsemen's purses and the other half retained by the racetrack. The agreement with the OLGC has a five-year term that expires in October 2005. The agreement contemplates that it will be automatically renewed for an additional five years, unless terminated by the OLGC for material breach. Following the first renewal period, the OLGC may elect to renew the agreement for a second five-year extension. Following the initial term, the OLGC may terminate the agreement at any time (and without payment to Flamboro Downs) on 270 days' notice. There can be no assurance as to how long the arrangement with the OLGC will continue, or, if it does, whether the terms will remain the same.

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Remington Park

        Remington Park is situated on approximately 370 acres adjacent to Interstates 35 and 44 in Oklahoma City, Oklahoma. There are approximately 1.1 million people living within a 40-mile radius of Remington Park.

        In 2004, the racing schedule consisted of two meets totaling 93 days of live racing days, which included a 28 day quarter horse meet from mid-March through the end of May and a 65 day thoroughbred meet from early August through early December 2004. In 2005, Remington Park has been approved for 98 days of live racing, consisting of 32 days of quarter horse racing from mid-March through early June and a 66 day thoroughbred meet from early August through late November.

        Remington Park's handle was approximately $92.6 million in 2004, including wagers made at Remington Park on its races, wagers made at other wagering venues and through various account wagering operations on Remington Park's races, and wagers made at Remington Park on races imported to its inter-track and associated OTB facilities. Wagers on Remington Park's races (including all venues at which wagers were placed) totaled approximately $29.4 million in 2004. Of this amount, approximately $22.1 million in wagers were placed at other wagering venues to which we exported Remington Park's races via simulcast and through various account wagering operations. Remington Park exports its simulcast signal to approximately 280 off-track and inter-track wagering facilities in the United States. Throughout the year, Remington Park operates as an inter-track wagering facility where customers can wager on races that are imported to Remington Park from other racetracks across the country.

        Remington Park's facilities include a grandstand with seating for approximately 20,000 customers, 21 luxury suites for corporate and group events, a one-mile dirt track, a ⁷/8-mile turf course, stalls for approximately 1,300 horses, lighting to permit night racing and parking facilities sufficient to accommodate approximately 8,000 cars.

        The property on which Remington Park is located is leased from the Oklahoma Zoological Trust pursuant to a lease which extends through 2013, with options to renew until 2063 in ten-year increments.

        Under new legislation which was approved by the citizens of the State of Oklahoma in a referendum held on November 2, 2004, upon regulatory approval and licensing, Remington Park will be permitted to operate 650 electronic gaming machines, subject to increases of an additional 50 machines in each of the third and fifth years after the issuance of the applicable license. See " — Government Regulation — Alternative Gaming — Oklahoma."

Portland Meadows

        Portland Meadows is a thoroughbred racetrack located on approximately 100 acres in the Delta Park area of Portland, Oregon. There are approximately 2.0 million people living within a 40-mile radius of Portland Meadows. Portland Meadows first opened in 1946 and offers approximately 80 live racing days between October and April. Portland Meadows' facilities include a grandstand with seating for approximately 10,000 customers, a one-mile sand track, stalls for approximately 850 horses and parking facilities to accommodate approximately 2,500 cars.

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        Portland Meadows generated approximately $70.5 million in handle during its 2004 race meet, including wagers made at Portland Meadows on its races, wagers made at other wagering venues and through various account wagering operations on Portland Meadows' races and wagers on imported races at Portland Meadows and OTB facilities within the State of Oregon during Portland Meadows' live meet. Wagers on Portland Meadows' races (including all venues at which the wagers were placed) totaled approximately $21.3 million in 2004. Of this amount, approximately $18.8 million in wagers were placed at other wagering venues to which we exported Portland Meadows' races via simulcast and through various account wagering operations. Portland Meadows exports its simulcast signal to approximately 150 off-track and inter-track wagering facilities in the United States and Canada. Throughout the year, Portland Meadows operates as an inter-track wagering facility where customers can wager on races that are imported to Portland Meadows from other racetracks.

        We operate racing at Portland Meadows, subject to the satisfaction of certain conditions, pursuant to a long term lease. We own an approximately 22% interest in the real property upon which the Portland Meadows facility is located.

Great Lakes Downs

        Great Lakes Downs is situated on approximately 85 acres in Muskegon, Michigan, approximately 35 miles from Grand Rapids. There are approximately 1.2 million people living within a 50-mile radius of Great Lakes Downs.

        Great Lakes Downs, which commenced operations in January 1999, offers approximately 118 live racing days beginning in April and ending in October of each year.

        Great Lakes Downs' handle was approximately $55.7 million in 2004, including wagers made at Great Lakes Downs on its races, wagers made at other wagering venues and through various account wagering operations on Great Lakes Downs' races, and wagers made at Great Lakes Downs on imported races. Wagers on Great Lakes Downs' races (including all venues at which wagers were placed) totaled approximately $43.5 million in 2004. Of this amount, approximately $40.3 million in wagers were placed at other wagering venues to which we exported Great Lakes Downs' races via simulcast and through various account wagering operations. Great Lakes Downs exports its simulcast signal to approximately 250 off-track and inter-track wagering facilities in the United States. Throughout the year, Great Lakes Downs operates as an inter-track wagering facility where customers can wager on races that are imported to Great Lakes Downs from other racetracks.

        Great Lakes Downs' facilities include a grandstand with seating for approximately 10,000 customers, a ⁵/8-mile dirt track, stalls for approximately 800 horses and parking facilities sufficient to accommodate approximately 3,200 cars.

        On August 24, 2004, we sold the real property and associated racetrack license of Great Lakes Downs to Richmond Racing Co., LLC for approximately $4.2 million. The consideration included cash of $0.2 million and the issuance of a 20-year promissory note with a principal amount of $4.0 million, which bears interest at 5% per annum. We also entered into a lease agreement with Richmond Racing, which gives us the conditional right to continue operating Great Lakes Downs and to conduct thoroughbred race meetings at the racetrack. The lease is for an initial term of five years with an option to renew the lease for up to three additional periods of five years each. We also have an option to repurchase the property and associated racetrack license of Great Lakes Downs from Richmond Racing in the event we are unsuccessful in obtaining a racetrack license for the proposed Romulus racetrack or in the event that state law in Michigan is amended to allow an entity to hold more than one racetrack license.

Magna Racino™

        Our newest racetrack, Magna Racino™ opened on April 4, 2004 and is situated on approximately 650 acres in Ebreichsdorf, just outside Vienna, Austria. There are approximately 2.5 million people living within a 30-mile radius of Magna Racino™. Since its opening, Magna Racino™ has been visited by over 180,000 guests and held a meet consisting of 50 live racing days in 2004 between early April and early November. In 2005, Magna Racino™ has been approved for 45 days of live racing, between mid-March and late November.

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        Magna Racino™ features both thoroughbred and standardbred racing on three different tracks, a ⁵/8-mile sand track, a one-mile sand track and a one-mile turf course. Magna Racino's™ facilities include 113 paddocks, 600 stables, parking for approximately 2,400 cars, a grandstand that also houses a 150,000 square foot entertainment center, three restaurants, a simulcast center and a sportsbook/gaming facility that opened in September 2004. Magna Racino's™ sportsbook facility is operated by Admiral Sportwetten AG under an agreement that entitles Magna Racino™ to receive a percentage of all wagers placed with Admiral at Magna Racino™. Magna Racino's™ 150 video lottery terminals are operated by the Austrian Lottery, a division of Casinos Austria AG, under an agreement that entitles Magna Racino™ to receive a percentage of the gross profit and recovery of certain costs from the video lottery terminal operations located at Magna Racino™.

        Magna Racino's™ handle was approximately $4.1 million in 2004, its inaugural year, including wagers made at Magna Racino™ on its races, wagers made at other wagering venues and through account wagering operations on Magna Racino™ races and wagers made at Magna Racino™ on imported races. Magna Racino™ exports its simulcast signal to various off-track and inter-track wagering facilities in Germany and Austria. Throughout the year, Magna Racino™ operates as an inter-track wagering facility where customers can wager on races that are imported to Magna Racino™ from other racetracks around the world.

Colonial Downs

        The Maryland Jockey Club manages the racing and pari-mutuel operations of Colonial Downs and its network of six OTB facilities in Virginia. Colonial Downs is a racetrack in New Kent, Virginia which hosted 34 days of thoroughbred racing and 32 days of standardbred racing in 2004. The thoroughbred meet at Colonial Downs runs from mid-June to late July, between the meets at Pimlico Race Course and Laurel Park. The standardbred meet runs from early October to late November. The track's signature race is the Virginia Derby (Gr. III), which is a 1¹/4-mile turf race for three-year-old horses that features a $500,000 purse.

Training Centers

Palm Meadows®

        On October 18, 2000, we acquired 481 acres of land in Palm Beach County, Florida for a total purchase price of $22.9 million. The property is located approximately 40 miles north of Gulfstream Park. We have developed a horse boarding and training center on this land, which is operated in conjunction with Gulfstream Park, which we believe will help us to continue to attract high-quality horses to Gulfstream Park and to expand our field sizes at that racetrack. We believe that this in turn will allow us to increase both our number of live races and the total amount wagered on our races.

        The facility currently includes a 1¹/8-mile dirt track, a one-mile turf course, stalls for up to 1,440 horses, administrative offices, dormitories and a viewing stand. The facility opened in November 2002 and is currently home to over 1,200 horses for Gulfstream's 2005 meet.

        Construction began in October 2003 on a 60,000 square foot compost building that was completed in October 2004. We also applied for, and obtained a permit from Palm Beach County to develop an equestrian estate residential development on approximately 157 acres of our property situated adjacent to the training facility, with access to the training facility. As of December 31, 2004, we have spent approximately $84.9 million on the development of the training center and the infrastructure for the residential development, in addition to the initial purchase price of the land.

San Luis Rey Downs

        San Luis Rey Downs is a horse boarding and training center situated approximately 45 miles north of downtown San Diego. It is located on approximately 200 acres of land and includes over 500 horse stalls, a one-mile oval dirt main track, a ³/8-mile dirt training track, an equine exercise pool, horse trails and related facilities and equipment. Due to its proximity to Santa Anita Park, San Luis Rey Downs supplements Santa Anita Park's stabling facilities, which we believe enables us to continue to attract some of the top horses in North America.

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Bowie Training Center

        The Bowie Training Center is located in Prince George's County, Maryland on approximately 162 acres. The site is located eight miles from Laurel Park and 30 miles from Pimlico Race Course. The facility includes approximately 1,000 stalls, a one-mile oval dirt main track, a ¹/4-mile covered dirt track, 17 barns and dormitories capable of accommodating up to 224 grooms. Originally opened in 1914 as a racetrack, the property has been used since 1985 as a year-round training center to support thoroughbred racing at Pimlico and Laurel Park.

Account Wagering Operations

        Account wagering involves the placing of wagers on live horse racing events through various forms of electronic media, which could include telephone, the Internet and interactive television.

XpressBet®

        We offer advance deposit account wagering by telephone and over the Internet through XpressBet®, to customers in certain jurisdictions of the United States, subject to legal and governmental restrictions. See "— Government Regulation". Operators of advance deposit account wagering businesses may establish a hub in a state where advance deposit account wagering is expressly permitted, establish accounts into which customers deposit funds through debit or credit cards or by check to fund their wagering, and receive wagering instructions from these customers. Wagers placed by customers are not allowed to exceed the amounts on deposit in their accounts. Customers of XpressBet® may place wagers either over the telephone with a live teller, over the telephone with an automated teller, over the telephone with a touch tone recognition system or through the Internet.

        XpressBet® originally operated under the trade name Call-A-Bet under The Meadows harness track license in Pennsylvania. Call-A-Bet launched a telephone account wagering business in 1983 for Pennsylvania account holders. In 1995, Call-A-Bet expanded its customer base throughout the United States. We purchased Ladbroke Racing Pennsylvania, Inc., which included The Meadows and Call-A-Bet, in April 2001 and upon obtaining a license to conduct advance deposit account wagering in California in January 2002, re-branded the account wagering company as XpressBet®. XpressBet® is currently licensed in Pennsylvania and California, where its operations are located, to receive advance deposit account wagers from residents in those states and other jurisdictions that permit account wagering. In addition, XpressBet® has received licenses in Oregon, Washington and Idaho. See "— Government Regulation".

        Wagering through an XpressBet® account is only permitted after XpressBet® has verified the account holder's identity, address and age and the account has been funded. XpressBet® account holders can wager on over 100 North American racetracks and internationally on races in Australia, South Africa and Dubai. The XpressBet® service provides up-to-the-minute racing information, including live odds and results, race program information, real-time audio and video streaming and an easy-to-use betting screen.

        The primary source of revenue for XpressBet® is the takeout on the handle wagered by its customers through advance deposit accounts. The takeout revenue is reduced by host track fees, purse account funds, source market fees and other operating expenses. For the year ended December 31, 2004, total handle wagered through XpressBet® was $132.3 million.

MagnaBet™

        MagnaBet™ offers advance deposit account wagering over the Internet and via mobile communications devices, to customers in Austria and Germany. MagnaBet™ holds licenses issued by the provincial government of Lower Austria and the provincial government of Hanover, Germany, which allow it to accept and process pari-mutuel wagers. Customers deposit funds through credit cards, prepaid cards, bank transfers and internet-banking to fund their wagering accounts, and receive wagering instructions from these customers. Wagers placed by customers are not allowed to exceed the amounts on deposit in their accounts. Customers of MagnaBet™ may place wagers either through the Internet or mobile devices.

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        MagnaBet™ was launched in Austria in September 2004, where its operations are located, and in Germany in December 2004. Wagering through a MagnaBet™ account is only permitted after MagnaBet™ has verified the account holder's identity, address and age and the account has been funded. MagnaBet™ account holders can wager on thoroughbred and harness races at Magna Racino™, on races at Krieau, an Austrian standardbred racetrack, opened in 1878 and internationally on over 27 North American thoroughbred and standardbred racetracks. The MagnaBet™ service provides up-to-the-minute racing information, including live odds and results, race program and past performance information, real-time audio and video streaming and an easy-to-use betting screen.

        The primary source of revenue for MagnaBet™ is the takeout on the handle wagered by its customers through advance deposit accounts. The takeout revenue is reduced by host track fees, totalisator service fees, taxes and other operating expenses.

Sunshine Millions®

        On January 25, 2003, we launched Sunshine Millions®, a thoroughbred horse racing event which features California breds and Florida breds in head to head competition. The annual event, which is hosted by Santa Anita Park and Gulfstream Park, consists of eight races, four races at Santa Anita Park and four races at Gulfstream Park, with purses ranging from $250,000 to $1 million per race, for a total of $3.6 million in guaranteed purses.

        Florida breds won five out of eight races when they competed head to head against California breds during the third edition of the Sunshine Millions® held on January 29, 2005. This event was covered on a national two-hour NBC broadcast. Overnight ratings for the two-hour broadcast secured a four percent share of all televisions in use. All sources handle for Gulfstream Park and Santa Anita Park, together with on-site handle, topped $31 million for the 2005 edition of the Sunshine Millions®.

Television Distribution

        We believe that broad television distribution will help increase future interest in the sport of horse racing and attract additional wagering customers. In order to accomplish this goal, we have entered into a number of television distribution initiatives.

HorseRacing TV™

        HorseRacing TV™ is a television network focused on horse racing. HorseRacing TV™ carries horse racing from racetracks located throughout North America as well as commentary and related content, combined into a single signal produced by Santa Anita Park's award-winning television department. In January 2003, we launched HorseRacing TV™ on our first cable television system (Time Warner San Diego) and we have quickly grown the network's distribution to over 11 million cable and satellite subscribers nationally. HorseRacing TV™ has entered into a national distribution agreement with Dish Network™ (Echostar Communications Corp.) that makes HRTV available in all 50 U.S. states. Additionally, HorseRacing TV™ has entered into agreements with certain national/regional cable television operators, including Comcast, to make HorseRacing TV™ available via cable distribution in 15 states. HorseRacing TV™ is also available on RTN (see below).

        We will continue to seek broad distribution of HorseRacing TV™ through additional distribution agreements with other cable and satellite television systems.

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RTN

        In 2002, we entered into an arrangement with Roberts Communications Network, Inc. and an affiliate of Greenwood Racing, Inc. to form RTN, a private U.S. direct-to-home satellite service that currently offers twenty channels dedicated to horse racing on a monthly subscription basis. We hold a minority interest in RTN, which is independently managed by Roberts Communications Network, Inc., and we