Gambles paying off for Centaur CEO

Rod Ratcliff still remembers the day nearly 20 years ago when he entered an off-track betting parlor for the first time.
He was working for the Chicago Board of Trade back then, and his rail commute passed by one. Ratcliff noticed the hordes of
people always there–morning, noon and night.

One day, he stepped off the train and went inside. He marveled at the walls filled with flashing screens and the piles of
cash changing hands.

"I was scared. I was nervous about the whole thing. I didn't know if it was legal or not," Ratcliff recalled
with a laugh. "It was unbelievable. I saw all these people making a lot of money and I said, 'I've really got
to have one of these.'"

Ratcliff has come a long way since. Through persistence and sheer pluck, the 49-year-old has become a player in the gambling
industry–a highly regulated but enormously profitable sector, one many businesses try to break into, most without success.

On Oct. 30, his Indianapolis-based company, Centaur Inc., closed a $1 billion financing deal that will fund gambling projects
in three states. It was one of the biggest gambling transactions in the state's history. Providing $200 million of the
financing was MH Equity, the private-equity firm launched by Conseco Inc. co-founder Stephen Hilbert and backed by home improvement
billionaire John Menard.

Sixteen-year-old Centaur owns the Anderson horse track Hoosier Park. The company plans to spend $250 million from the financing
to acquire the state license it needs to add 2,000 slot machines there. Centaur then will use another $150 million to construct
the 92,696-square-foot expansion to house them. The "racino" is expected to be finished by June.

That's the project Hoosiers have followed, but it's not even the biggest one pending for Centaur. Most of the remaining
$600 million will finance development of Valley View Downs, a horse track and slots casino Centaur has on the drawing board
for 55 miles northwest of Pittsburgh.

Centaur also plans to devote some of the financing to retire $30 million in debt related to its 2003 acquisition of Fortune
Valley Hotel and Casino in Central City, Colo., and to upgrade its network of OTB parlors in Indianapolis, Evansville and
Fort Wayne.

Centaur will be busy with those projects for the next three years, and Ratcliff is reluctant to speculate about what happens
beyond. But he fully expects all three to boom. And if they do, Centaur has dreams of building a series of affiliated hotels,
entertainment venues and convention facilities.

Ratcliff has been laying the groundwork for his recent successes since the early 1990s, a time when he was long on ideas
but short on cash.

For capital, Ratcliff turned to agribusiness leaders he knew from his days growing up in Tippecanoe County, where he'd
once sold seed.

An early backer, for instance, was insurance agent Mel Budreau, who recalls mortgaging his largest asset–a house he rented
out–''to the hilt" to come up with his investment. The six-figure commitment, Budreau said, has paid off many
times over as Radcliff's plans have become reality.

Ratcliff initially pushed for legalization of pari-mutuel horse tracks in Indiana, then moved on to riverboat casinos. He
got in on the ground floor of both. After Louisville-based Churchill Downs built Hoosier Park in 1994, he served as a minority
partner, along with Conseco.

Later, he brokered a deal with the city of Lawrenceburg to lobby on its behalf for a casino license, agreeing to forgo fees
in return for a role in development if his efforts succeeded. He and Conseco became minority partners in that venture, with
Argosy Gaming Co. owning the majority.

"When walls get put in front of Rod, he just knocks 'em down and moves forward," Hilbert said. "The best
investments I've ever made have been in people. In 1993, I knew what I thought Rod was. He's certainly proven it every
step of the way."

Centaur sold its Argosy interest in 2001. This April, Centaur bought out Churchill Downs to become Hoosier Park's sole
owner.

Hoosier Park and Indiana Downs in Shelbyville had been pushing for slots for years when the Indiana General Assembly finally
approved them this spring, just days after Centaur acquired full ownership of the Anderson track.

The fact the track owners finally succeeded is partly a testament to Ratcliff's tenacity, said Jack Thar, a former chairman
of the Indiana Gaming Commission. Thar, now a partner with Ice Miller, helps represent Centaur.

"You could sit back and look at some of the things Rod has accomplished and say, 'If you stick to it, you'll
get it done,'" Thar said. "But there are some major hurdles others don't want to jump over that he and his
company have decided are well worth it."

Centaur took a similarly long view of its Colorado business, Fortune Valley Hotel and Casino, 35 miles west of Denver. Before
Centaur acquired it, patrons had trouble reaching the place. They had to navigate a narrow, treacherous mountain road. Only
a few hundred drivers braved it each day.

But Centaur recognized the inadequate road as a limiting factor on Fortune Valley's growth. So the company acquired 365
parcels of private land and built the 7-1/2-mile, $50 million, four-lane Central City Parkway. The thoroughfare opened in
2005. Ratcliff said the casino now has about 2,800 patrons a day. And profits have doubled.

The Valley View Downs project also didn't come easy. Regulators rejected Centaur's original proposal because of technical
design concerns. In response, the Indianapolis company waged a four-year battle all the way to the Pennsylvania Supreme Court,
where it ultimately lost.

But Ratcliff didn't give up. Instead, Centaur simply cut a land deal with its last remaining rival, Bedford Downs Management
Corp.

Bedford owned the property that Pennsylvania regulators had preferred for the project, but they had misgivings about the
lineage of one of its owners. The site originally had been acquired by the owner's deceased grandfather, a man with reputed
organized crime ties.

Centaur now has approval for harness racing at Valley View and is the last remaining applicant for the Pennsylvania slot
license it needs. The company's project still requires final approval from that state's gambling commission.

After approval, Centaur will begin construction of the racino, and Bedford Downs intends to build a nearby waterpark, as
well as a retail development.

Ratcliff noted that Centaur kept a veto authority over Bedford Downs' plans.

"With two people in a competition, if you can figure out in any deal multiple ways to win, it makes it good for both
parties. That's what happened," he said. "Maybe we both didn't get exactly what we wanted, but we both won."

Until 2000, Centaur primarily was a developer that took minority positions in horse track and casinos within Indiana. It
had just four employees. Since then, Centaur has shifted to become a majority owner of gambling venues and now has about 2,000
employees.

Ed Feigenbaum, publisher of Indiana Gaming Insight, said Centaur's challenge in the days to come will be continuing
to adjust to its new position as a big-time gambling industry player.

"Right now, they'll focus on getting everything operational and turning them into first-class facilities,"
Feigenbaum said. "They'll be challenged working in different regulatory environments in at least three different
states. It's not just the Indiana Gaming Commission anymore, or the Horse Racing Commission. You have to be a lot more
things to a lot more people."