Dover Downs Gaming & Entertainment (DDE)

Table of Contents

International Speedway.  As of December 31, 2008 and 2007, our consolidated balance sheet includes an $11,000 and $18,000 payable to DVD, respectively, for the aforementioned items.  We settled these payables in January of 2009 and 2008, respectively.  The net costs incurred by each company for these services are not necessarily indicative of the costs that would have been incurred if the companies had been unrelated entities and/or had otherwise independently managed these functions; however, management believes that these costs are reasonable.

Our use of DVD’s 5/8-mile harness racing track is pursuant to an easement granted to us by DVD which does not require the payment of any rent. Under the terms of the easement, we have exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period.  The harness track is located on property owned by DVD and is on the inside of DVD’s motorsports superspeedway.  Our indoor grandstands are used by DVD at no charge in connection with its major motorsports events. DVD also leases its principal office space from us.  Various easements and agreements relative to access, utilities and parking have also been entered into between DVD and us relative to our respective Dover, Delaware facilities.

In conjunction with the spin-off from DVD, we and DVD entered into various agreements that addressed the allocation of assets and liabilities between the two companies and that define the companies’ relationship after the separation.  Among these are the Real Property Agreement and the Transition Support Services Agreement.

The Real Property Agreement governs certain real property transfers, leases and easements affecting our Dover, Delaware facility.

The Transition Support Services Agreement provides for each of us and DVD to provide each other with certain administrative and operational services.  The party receiving the services is required to pay for them within 30 business days after receipt of an invoice at rates agreed upon by us and DVD.  The agreement may be terminated in whole or in part 90 days after the request of the party receiving the services or 180 days after the request of the party providing the services.

Henry B. Tippie, Chairman of our Board of Directors, controls in excess of fifty percent of our voting power.  Mr. Tippie’s voting control emanates from his direct and indirect holdings of common stock and Class A common stock, from his status as trustee of the RMT Trust, our largest stockholder, and from certain shares as to which he has voting rights pursuant to a voting agreement with R. Randall Rollins, one of our directors.  This means that Mr. Tippie has the ability to determine the outcome of our election of directors and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power.

Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn, Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins and Henry B. Tippie are all Directors of ours and DVD. Denis McGlynn is the President and Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior Vice President — General Counsel and Secretary of both companies and Timothy R. Horne is the Senior Vice President — Finance and Chief Financial Officer of both companies.  Mr. Tippie controls in excess of fifty percent of the voting power of DVD.

Table of Contents

International Speedway.  As of December 31, 2008 and 2007, our consolidated balance sheet includes an $11,000 and $18,000 payable to DVD, respectively, for the aforementioned items.  We settled these payables in January of 2009 and 2008, respectively.  The net costs incurred by each company for these services are not necessarily indicative of the costs that would have been incurred if the companies had been unrelated entities and/or had otherwise independently managed these functions; however, management believes that these costs are reasonable.

Our use of DVD’s 5/8-mile harness racing track is pursuant to an easement granted to us by DVD which does not require the payment of any rent. Under the terms of the easement, we have exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period.  The harness track is located on property owned by DVD and is on the inside of DVD’s motorsports superspeedway.  Our indoor grandstands are used by DVD at no charge in connection with its major motorsports events. DVD also leases its principal office space from us.  Various easements and agreements relative to access, utilities and parking have also been entered into between DVD and us relative to our respective Dover, Delaware facilities.

In conjunction with the spin-off from DVD, we and DVD entered into various agreements that addressed the allocation of assets and liabilities between the two companies and that define the companies’ relationship after the separation.  Among these are the Real Property Agreement and the Transition Support Services Agreement.

The Real Property Agreement governs certain real property transfers, leases and easements affecting our Dover, Delaware facility.

The Transition Support Services Agreement provides for each of us and DVD to provide each other with certain administrative and operational services.  The party receiving the services is required to pay for them within 30 business days after receipt of an invoice at rates agreed upon by us and DVD.  The agreement may be terminated in whole or in part 90 days after the request of the party receiving the services or 180 days after the request of the party providing the services.

Henry B. Tippie, Chairman of our Board of Directors, controls in excess of fifty percent of our voting power.  Mr. Tippie’s voting control emanates from his direct and indirect holdings of common stock and Class A common stock, from his status as trustee of the RMT Trust, our largest stockholder, and from certain shares as to which he has voting rights pursuant to a voting agreement with R. Randall Rollins, one of our directors.  This means that Mr. Tippie has the ability to determine the outcome of our election of directors and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power.

Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn, Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins and Henry B. Tippie are all Directors of ours and DVD. Denis McGlynn is the President and Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior Vice President — General Counsel and Secretary of both companies and Timothy R. Horne is the Senior Vice President — Finance and Chief Financial Officer of both companies.  Mr. Tippie controls in excess of fifty percent of the voting power of DVD.

Table of
Contents

International
Speedway.  As of December 31, 2008
and 2007, our consolidated balance sheet includes an $11,000 and $18,000
payable to DVD, respectively, for the aforementioned items.  We settled these payables in January of
2009 and 2008, respectively.  The net
costs incurred by each company for these services are not necessarily
indicative of the costs that would have been incurred if the companies had been
unrelated entities and/or had otherwise independently managed these functions;
however, management believes that these costs are reasonable.

Our use of DVD’s 5/8-mile harness racing track is pursuant to an
easement granted to us by DVD which does not require the payment of any rent.
Under the terms of the easement, we have exclusive use of the harness track
during the period beginning November 1 of each year and ending April 30
of the following year, together with set up and tear down rights for the two
weeks before and after such period.  The
harness track is located on property owned by DVD and is on the inside of DVD’s
motorsports superspeedway.  Our indoor
grandstands are used by DVD at no charge in connection with its major
motorsports events. DVD also leases its principal office space from us.  Various easements and agreements relative to
access, utilities and parking have also been entered into between DVD and us
relative to our respective Dover, Delaware facilities.

In conjunction with the spin-off from DVD, we and DVD
entered into various agreements that addressed the allocation of assets and liabilities
between the two companies and that define the companies’ relationship after the
separation.  Among these are the Real
Property Agreement and the Transition Support Services Agreement.

The Real Property Agreement governs certain real
property transfers, leases and easements affecting our Dover, Delaware
facility.

The Transition Support Services Agreement provides for
each of us and DVD to provide each other with certain administrative and
operational services.  The party
receiving the services is required to pay for them within 30 business days
after receipt of an invoice at rates agreed upon by us and DVD.  The agreement may be terminated in whole or
in part 90 days after the request of the party receiving the services or 180
days after the request of the party providing the services.

Henry B. Tippie, Chairman of our Board of Directors,
controls in excess of fifty percent of our voting power.  Mr. Tippie’s voting control emanates
from his direct and indirect holdings of common stock and Class A common
stock, from his status as trustee of the RMT Trust, our largest stockholder,
and from certain shares as to which he has voting rights pursuant to a voting
agreement with R. Randall Rollins, one of our directors.  This means that Mr. Tippie has the ability
to determine the outcome of our election of directors and to determine the
outcome of many significant corporate transactions, many of which only require
the approval of a majority of our voting power.

Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn,
Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins and Henry B.
Tippie are all Directors of ours and DVD. Denis McGlynn is the President and
Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior
Vice President — General Counsel and Secretary of both companies and Timothy R.
Horne is the Senior Vice President — Finance and Chief Financial Officer of
both companies.  Mr. Tippie controls
in excess of fifty percent of the voting power of DVD.

Table of
Contents

International
Speedway.  As of December 31, 2008
and 2007, our consolidated balance sheet includes an $11,000 and $18,000
payable to DVD, respectively, for the aforementioned items.  We settled these payables in January of
2009 and 2008, respectively.  The net
costs incurred by each company for these services are not necessarily
indicative of the costs that would have been incurred if the companies had been
unrelated entities and/or had otherwise independently managed these functions;
however, management believes that these costs are reasonable.

Our use of DVD’s 5/8-mile harness racing track is pursuant to an
easement granted to us by DVD which does not require the payment of any rent.
Under the terms of the easement, we have exclusive use of the harness track
during the period beginning November 1 of each year and ending April 30
of the following year, together with set up and tear down rights for the two
weeks before and after such period.  The
harness track is located on property owned by DVD and is on the inside of DVD’s
motorsports superspeedway.  Our indoor
grandstands are used by DVD at no charge in connection with its major
motorsports events. DVD also leases its principal office space from us.  Various easements and agreements relative to
access, utilities and parking have also been entered into between DVD and us
relative to our respective Dover, Delaware facilities.

In conjunction with the spin-off from DVD, we and DVD
entered into various agreements that addressed the allocation of assets and liabilities
between the two companies and that define the companies’ relationship after the
separation.  Among these are the Real
Property Agreement and the Transition Support Services Agreement.

The Real Property Agreement governs certain real
property transfers, leases and easements affecting our Dover, Delaware
facility.

The Transition Support Services Agreement provides for
each of us and DVD to provide each other with certain administrative and
operational services.  The party
receiving the services is required to pay for them within 30 business days
after receipt of an invoice at rates agreed upon by us and DVD.  The agreement may be terminated in whole or
in part 90 days after the request of the party receiving the services or 180
days after the request of the party providing the services.

Henry B. Tippie, Chairman of our Board of Directors,
controls in excess of fifty percent of our voting power.  Mr. Tippie’s voting control emanates
from his direct and indirect holdings of common stock and Class A common
stock, from his status as trustee of the RMT Trust, our largest stockholder,
and from certain shares as to which he has voting rights pursuant to a voting
agreement with R. Randall Rollins, one of our directors.  This means that Mr. Tippie has the ability
to determine the outcome of our election of directors and to determine the
outcome of many significant corporate transactions, many of which only require
the approval of a majority of our voting power.

Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn,
Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins and Henry B.
Tippie are all Directors of ours and DVD. Denis McGlynn is the President and
Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior
Vice President — General Counsel and Secretary of both companies and Timothy R.
Horne is the Senior Vice President — Finance and Chief Financial Officer of
both companies.  Mr. Tippie controls
in excess of fifty percent of the voting power of DVD.

since settled the payable in the first quarter of 2008.  The net costs incurred by each company for these services are not necessarily indicative of the costs that would have been incurred if the companies had been unrelated entities and/or had otherwise independently managed these functions; however, management believes that these costs are reasonable.

         Our use of DVD’s 5/8-mile harness racing track is pursuant to an easement granted to us by DVD which does not require the payment of any rent. Under the terms of the easement, we have exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period.  The harness track is located on property owned by DVD and is on the inside of DVD’s motorsports superspeedway.  Our indoor grandstands are used by DVD at no charge in connection with its major motorsports events. DVD also leases its principal office space from us.  Various easements and agreements relative to access, utilities and parking have also been entered into between DVD and us relative to our respective Dover, Delaware facilities.

         In conjunction with the spin-off from DVD, we and DVD entered into various agreements that addressed the allocation of assets and liabilities between the two companies and that define the companies’ relationship after the separation.  Among these are the Real Property Agreement, the Transition Support Services Agreement and the Tax Sharing Agreement.

        The Real Property Agreement governs certain real property transfers, leases and easements affecting our Dover, Delaware facility.

        The Transition Support Services Agreement provides for each of us and DVD to provide each other with certain administrative and operational services.  The party receiving the services is required to pay for them within 30 business days after receipt of an invoice at rates agreed upon by us and DVD.  The agreement may be terminated in whole or in part 90 days after the request of the party receiving the services or 180 days after the request of the party providing the services.

         The Tax Sharing Agreement provides for, among other things, the treatment of income tax matters for periods beginning before and including the date of the spin-off and any taxes resulting from transactions effected in connection with the spin-off. With respect to any period ending on or before the spin-off or any tax period in which the spin-off occurs, DVD:

·                  continues to be the sole and exclusive agent for us in all matters relating to our income, franchise, property, sales and use tax liabilities;

·                  subject to our obligation to pay for items relating to our gaming business, bears any costs relating to tax audits, including tax assessments and any related interest and penalties and any legal, litigation, accounting or consulting expenses;

·                  continues to have the sole and exclusive responsibility for the preparation and filing of consolidated federal and consolidated state income tax returns; and

·                  subject to the right and authority of us to direct DVD in the defense or prosecution of the portion of a tax contest directly and exclusively related to any Dover Downs Gaming & Entertainment, Inc. tax adjustment, generally has the powers, in DVD’s sole discretion, to contest or compromise any claim or refund on our behalf.

        Henry B. Tippie, Chairman of our Board of Directors, controls in excess of fifty percent of our voting power.  Mr. Tippie’s voting control emanates from his direct and indirect holdings of common stock and Class A common stock, from his status as executor of the estate of John W. Rollins, our largest stockholder, and from certain shares as to which he has voting rights pursuant to a voting agreement with R. Randall Rollins, one of our directors.  This means that Mr. Tippie has the ability to determine the outcome of our election of directors and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power. On January 31, 2008, the estate of John W. Rollins transferred all of its holdings in our stock to the RMT Trust, a trust established under the terms of the last will and testament of John W. Rollins.  As trustee of the RMT Trust, Mr. Tippie has sole voting and dispositive power over these stockholdings and he continues to control in excess of fifty percent of our voting power.

50

        Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn, Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins and Henry B. Tippie are all Directors of ours and DVD. Denis McGlynn is the President and Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior Vice President — General Counsel and Secretary of both companies and Patrick J. Bagley is the Senior Vice President — Finance and Chief Financial Officer of DVD.  Mr. Tippie controls in excess of fifty percent of the voting power of DVD.

since settled the payable in the first quarter of 2008.  The net costs incurred by each company for
these services are not necessarily indicative of the costs that would have been
incurred if the companies had been unrelated entities and/or had otherwise
independently managed these functions; however, management believes that these
costs are reasonable.

         Our
use of DVD’s 5/8-mile harness racing track is pursuant to an easement granted
to us by DVD which does not require the payment of any rent. Under the terms of
the easement, we have exclusive use of the harness track during the period
beginning November 1 of each year and ending April 30 of the
following year, together with set up and tear down rights for the two weeks
before and after such period.  The
harness track is located on property owned by DVD and is on the inside of DVD’s
motorsports superspeedway.  Our indoor
grandstands are used by DVD at no charge in connection with its major
motorsports events. DVD also leases its principal office space from us.  Various easements and agreements relative to
access, utilities and parking have also been entered into between DVD and us
relative to our respective Dover, Delaware facilities.

         In
conjunction with the spin-off from DVD, we and DVD entered into various
agreements that addressed the allocation of assets and liabilities between the
two companies and that define the companies’ relationship after the
separation.  Among these are the Real
Property Agreement, the Transition Support Services Agreement and the Tax
Sharing Agreement.

        The
Real Property Agreement governs certain real property transfers, leases and
easements affecting our Dover, Delaware facility.

        The
Transition Support Services Agreement provides for each of us and DVD to
provide each other with certain administrative and operational services.  The party receiving the services is required
to pay for them within 30 business days after receipt of an invoice at rates
agreed upon by us and DVD.  The agreement
may be terminated in whole or in part 90 days after the request of the party
receiving the services or 180 days after the request of the party providing the
services.

         The Tax Sharing Agreement provides for,
among other things, the treatment of income tax matters for periods beginning
before and including the date of the spin-off and any taxes resulting from
transactions effected in connection with the spin-off. With respect to any
period ending on or before the spin-off or any tax period in which the spin-off
occurs, DVD:

·                  continues to be the sole and exclusive
agent for us in all matters relating to our income, franchise, property, sales
and use tax liabilities;

·                  subject to our obligation to pay for items relating to
our gaming business, bears any costs relating to tax audits, including tax
assessments and any related interest and penalties and any legal, litigation,
accounting or consulting expenses;

·                  continues to have the sole and exclusive
responsibility for the preparation and filing of consolidated federal and
consolidated state income tax returns; and

·                  subject to the right and authority of us to direct DVD
in the defense or prosecution of the portion of a tax contest directly and
exclusively related to any Dover Downs Gaming & Entertainment, Inc.
tax adjustment, generally has the powers, in DVD’s sole discretion, to contest
or compromise any claim or refund on our behalf.

        Henry B. Tippie, Chairman
of our Board of Directors, controls in excess of fifty percent of our voting
power.  Mr. Tippie’s voting control
emanates from his direct and indirect holdings of common stock and Class A
common stock, from his status as executor of the estate of John W. Rollins, our
largest stockholder, and from certain shares as to which he has voting rights
pursuant to a voting agreement with R. Randall Rollins, one of our
directors.  This means that Mr. Tippie
has the ability to determine the outcome of our election of directors and to
determine the outcome of many significant corporate transactions, many of which
only require the approval of a majority of our voting power. On January 31, 2008, the estate of John W. Rollins transferred all
of its holdings in our stock to the RMT Trust, a trust established under the
terms of the last will and testament of John W. Rollins.  As trustee of
the RMT Trust, Mr. Tippie has sole voting and dispositive power over these
stockholdings and he continues to control in excess of fifty percent of our
voting power.

50

        Patrick J. Bagley, Kenneth
K. Chalmers, Denis McGlynn, Jeffrey W. Rollins, John W. Rollins, Jr., R.
Randall Rollins and Henry B. Tippie are all Directors of ours and DVD. Denis
McGlynn is the President and Chief Executive Officer of both companies, Klaus
M. Belohoubek is the Senior Vice President — General Counsel and Secretary of
both companies and Patrick J. Bagley is the Senior Vice President — Finance and
Chief Financial Officer of DVD.  Mr. Tippie
controls in excess of fifty percent of the voting power of DVD.

therefore, during the fourth quarter of 2003 Gaming & Entertainment recorded a $330,000 payable to DVD for the Company’s portion of the carryforward. Gaming & Entertainment paid the amount in the first quarter of 2004.

The Company’s use of DVD’s 5/8-mile harness racing track is pursuant to an easement granted to the Company by DVD which does not require the payment of any rent. Under the terms of the easement, the Company has exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period. The harness track is located on property owned by DVD and is on the inside of DVD’s motorsports superspeedway. The Company’s indoor grandstands are used by DVD at no charge in connection with its motorsports events. DVD also leases its principal office space from the Company. Various easements and agreements relative to access, utilities and parking have also been entered into between DVD and the Company relative to their respective Dover, Delaware facilities.

In conjunction with the spin-off from DVD, the Company and DVD entered into various agreements that addressed the allocation of assets and liabilities between the two companies and that define the companies’ relationship after the separation. Among these are the Real Property Agreement, the Transition Support Services Agreement and the Tax Sharing Agreement.

The Real Property Agreement governs certain real property transfers, leases and easements affecting the Company’s Dover, Delaware facility.

The Transition Support Services Agreement provides for each of the Company and DVD to provide each other with certain administrative and operational services. The party receiving the services is required to pay for them within 30 business days after receipt of an invoice at rates agreed upon by the Company and DVD. The agreement may be terminated in whole or in part 90 days after the request of the party receiving the services or 180 days after the request of the party providing the services.

The Tax Sharing Agreement provides for, among other things, the treatment of income tax matters for periods beginning before and including the date of the spin-off and any taxes resulting from transactions effected in connection with the spin-off. With respect to any period ending on or before the spin-off or any tax period in which the spin-off occurs, DVD:

•                     continues to be the sole and exclusive agent for the Company in all matters relating to the income, franchise, property, sales and use tax liabilities of the Company;

•                     subject to the Company’s obligation to pay for items relating to its gaming business, bears any costs relating to tax audits, including tax assessments and any related interest and penalties and any legal, litigation, accounting or consulting expenses;

•                     continues to have the sole and exclusive responsibility for the preparation and filing of consolidated federal and consolidated state income tax returns; and

•                     subject to the right and authority of the Company to direct DVD in the defense or prosecution of the portion of a tax contest directly and exclusively related to any Gaming & Entertainment tax adjustment, generally has the powers, in DVD’s sole discretion, to contest or compromise any claim or refund on the Company’s behalf.

Henry B. Tippie, the Chairman of the Company’s Board of Directors, controls in excess of fifty percent of the voting power of the Company. This means that Mr. Tippie has the ability to determine the outcome of the election of directors at the Company and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of the Company’s voting power.

Mr. Tippie’s voting control with respect to the Company emanates from his direct and indirect holdings of Common Stock and Class A Common Stock, from his status as executor of the estate of John W. Rollins, the Company’s largest stockholder, and from certain shares as to which he has voting rights pursuant to a voting agreement with another one of our directors. As of December 31, 2005, Mr. Tippie has control over approximately 55.9% of the voting power of the Company.

48

Patrick J. Bagley, Kenneth K. Chalmers, Denis McGlynn, Jeffrey W. Rollins, John W. Rollins, Jr., R. Randall Rollins and Henry B. Tippie are all Directors of the Company and DVD. Denis McGlynn is the President and Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior Vice President – General Counsel and Secretary of both companies and Patrick J. Bagley is the Senior Vice President – Finance and Chief Financial Officer of DVD. Mr. Tippie controls in excess of fifty percent of the voting power of DVD.