Colonial Downs Holdings, Inc. Reports 4th Quarter and 1998 Results.

NEW KENT, Va. --(BUSINESS WIRE)--March 31, 1999--Colonial Downs Holdings, Inc. (NASDAQ/NMS: CDWN) which, through its subsidiaries, holds the only unlimited licenses to own and operate a pari-mutuel horse racing course and satellite wagering facilities in Virginia, today reported results of operations for the fourth quarter and fiscal year ended December 31, 1998.

The Company reported revenues of $29,544,000 for the year ended December 31, 1998 compared with revenues of $23,647,000 for 1997, an increase of 24.9%. Direct operating expenses increased from $19,100,000 in 1997 to $26,715,000 in 1998, an increase of 40%. The net loss for the year ended 1998 was $5,288,000 compared with a year-end profit of $8,000 for 1997. Revenues for the fourth quarter were $7,257,000 compared with $6,033,000 for the same period in 1997, an increase of 20%.

Direct operating expenses in the fourth quarter 1998 were $4,218,000 compared with $5,253,000 in the same period in 1998, a decrease of 20%. The net loss in the fourth quarter of 1998 was $868,000 as compared with a net loss of $974,000 in the same period in 1997, a loss of $0.12 per share versus a loss of $0.13 per share, respectively.

The increase in revenue during these periods as compared with the same periods a year ago result from the operation of four racing centers for the entire twelve months of 1998, 71 days of live racing in 1998 versus 30 in 1997, and increased simulcast sales during live race meets. The increase in operating expenses is principally attributed to an increase in direct expenses resulting from an increase in live racing days from 1997 to 1998, and increases in purse expenses.

Commenting on the 1998 results, Chairman and Chief Executive Officer Jeffrey P. Jacobs said, "As we have said for several months now, given the cost structures in place during 1998, our losses are in line with our projections. In the spring of last year, we realized that we needed to make some definitive changes, so we developed a four part plan to put Colonial Downs on a profitable track in January 1999. The fundamental elements of the plan included re-negotiating the Maryland Jockey Club management contract; re-negotiating the contracts for the 1998 and 1999 live thoroughbred meets; implementing operating efficiencies; and re-negotiating the 1999 harness meet contract. We have implemented three of the four parts of our plan. We are working with the thoroughbred horsemen towards a mutually satisfactory arrangement for live thoroughbred racing in 1999. We expect the results of our efforts to be evident in the 1st quarter of this year."

Statements regarding implementation of financial plans, cost re-structuring, 1st quarter results and certain other statements contained in this news release are forward-looking statements and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such potential risks, uncertainties and factors include but are not limited to the, governmental regulations, including licensing of additional satellite wagering centers and approvals by the Virginia Racing Commission, competition from other sporting events and forms of entertainment, and the success of planned marketing and promotional efforts. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission.

Colonial Downs Holdings, Inc. is a Virginia corporation organized in November 1996 to pursue opportunities for horse racing wagering in Virginia. The Company holds, through its subsidiaries, the only unlimited licenses to own and operate a pari-mutuel horse racing course and satellite wagering facilities/racing centers in Virginia. Colonial Downs Holdings, Inc. became a publicly-held company in March 1997 and trades on the NASDAQ National Market System under the symbol CDWN. -0-

            Colonial Downs Holdings, Inc. and Subsidiaries
                 Consolidated Statements of Earnings
            Dollars in thousands, except per share amounts
                             (unaudited)

                              Quarter Ended            Year Ended
                               December 31             December 31
                             1998        1997        1998        1997

Revenues:                $  7,257    $  6,033    $ 29,544    $ 23,647

Expenses:
   Direct operating
     expenses               4,218       5,253      26,715      19,100
General and administrative
 expenses                   3,656       2,005       6,426       5,014
                         --------    --------    --------    --------
Total expenses              7,874       7,258      33,141      24,114
                         --------    --------    --------    --------

Earnings (loss)
 from operations             (617)     (1,225)     (3,597)       (467)
Interest expense             (340)       (162)     (1,825)       (278)
Interest income                 5         130          50         837
                         --------    --------    --------    --------
Earnings (loss)
 before income
 taxes                       (952)     (1,257)     (5,372)         92
Provision for
 (benefit from)
 income taxes                 (84)        283         (84)         84
                         --------    --------    --------    --------
Net earnings
 (loss)                  $   (868)   $   (974)   $ (5,288)   $      8

Earnings (loss)
 per common share
 Basic and
  diluted earnings
  (loss) per share       $  (0.12)   $  (0.13)   $  (0.73)   $   0.01
 Weighted avg  number of
  shares outstanding        7,250       7,250       7,250       6,318


Consolidated Balance Sheets:
Dollars in thousands, except per share
amounts (audited)
                                           At December 31
                                           1998       1997
                                            ----     ----
Assets:
  Current assets:
    Cash and equivalents                $ 1,155    $ 3,348
    Other current assets                  1,123      2,665
Total current assets                      2,278      6,013

Property, plant and
   equipment, net                        65,324     60,840
Other assets, net                           979      1,022

Total Assets                            $68,581    $67,875
                                        =======    =======

Liabilities and Stockholders'
   Equity

Current Liabilities
   Accounts payable                       6,417     11,678
   Accrued expenses                         730        831
   Purses due horsemen                      608      1,597
   Long-term debt, current position       9,184      1,373
Total current liabilities                16,939     15,479

Deferred tax liability                     --           84
Long-term debt                            8,508      9,890
Notes payable - stockholders              6,500      5,500
Total long-term liabilities              15,008     15,474

Total liabilities                        31,947     30,953

Stockholders' equity                     36,634     36,922

Total liabilities & stockholders'
   equity                               $68,581    $67,875
--------------------------------------  =======    =======