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Index to Financial Statements

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002

Commission file number 1-11929

Dover Motorsports, Inc.

(Exact name of registrant as specified in its charter)

1131 North DuPont Highway, Dover, Delaware 19901

(Address of principal executive offices)

(302) 674-4600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None.

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  x    No  ¨

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.    ¨

The aggregate market value of common stock held by non-affiliates of the registrant was $50,483,545 as of February 28, 2003.

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes  x    No  ¨

The aggregate market value of common stock held by non-affiliates of the registrant was $76,700,819 as of June 30, 2002 (the last day of our most recently completed second quarter).

As of February 28, 2003, the number of shares of each class of the Registrant’s common stock outstanding is as follows:

Documents Incorporated by Reference

Portions of the Registrant’s Proxy Statement in connection with the Annual Meeting of Stockholders to be held April 23, 2003 are incorporated by reference into Part III, Items 10 through 13 of this report.

Index to Financial Statements

Part I

References in this document to “the Company,” “DVD,” “we,” “us,” and “our” mean Dover Motorsports, Inc. and its wholly owned subsidiaries.

Item 1.    Business

Dover Motorsports, Inc. is a leading marketer and promoter of motorsports entertainment in the United States. Its motorsports subsidiaries operate seven motorsports tracks (four permanent facilities and three temporary circuits) in six states and promoted 18 major events during 2002 under the auspices of four of the premier sanctioning bodies in motorsports—the National Association for Stock Car Auto Racing (“NASCAR”), Championship Auto Racing Teams (“CART”), the Indy Racing League (“IRL”) and the National Hot Rod Association (“NHRA”). The Company owns and operates Dover International Speedway in Dover, Delaware; Nashville Superspeedway near Nashville, Tennessee; Gateway International Raceway near St. Louis, Missouri; and Memphis Motorsports Park near Memphis, Tennessee. The Company also organizes and promotes the Toyota Grand Prix of Long Beach in California, the Grand Prix of Denver in Colorado, and the Grand Prix of St. Petersburg in Florida, beginning with the inaugural event that occurred on February 23, 2003.

Dover Downs, Inc. was incorporated in 1967 and began motorsports and harness horse racing operations in 1969. As a result of several restructurings, Dover Downs, Inc. became a wholly owned subsidiary of ours and transferred all of its motorsports operations to another wholly owned subsidiary of ours, Dover International Speedway, Inc. Consequently, Dover Downs, Inc. became the operating entity for what previously comprised our gaming operations.

Effective March 31, 2002, the Company completed the tax-free spin-off of Dover Downs, Inc., its gaming business. To accomplish the spin-off, the Company contributed 100 percent of the issued and outstanding common stock of Dover Downs, Inc. to Dover Downs Gaming & Entertainment, Inc. (“Gaming”), a newly formed wholly owned subsidiary of the Company. On the effective date of the spin-off, the Company distributed all of the capital stock of Gaming to the Company’s stockholders on a pro-rata basis. Holders of the Company’s common stock or Class A common stock received 0.7 shares of Gaming common stock or Class A common stock for each share of the Company’s common stock or Class A common stock owned at the close of business on March 18, 2002, the record date for the spin-off. Each share of common stock or Class A common stock distributed was accompanied by one stock purchase right. Accordingly, the operations of the gaming business have been reflected as a discontinued operation in the accompanying consolidated financial statements. No gain or loss was recognized as a result of the spin-off due to the pro-rata nature of the distribution. The Company’s continuing operations subsequent to the spin-off consist solely of its motorsports activities. Based on an Internal Revenue Service Private Letter ruling, the spin-off is tax-free to the Company and its stockholders, except for cash received for any fractional shares. Immediately following the spin-off, the Company owned no shares of Gaming, and Gaming became an independent public company. A total of 9,998,976 shares of Gaming common stock and 16,638,359 shares of Gaming Class A common stock were distributed in connection with the spin-off. Also as part of the spin-off, a $9.5 million receivable from Gaming was cancelled.

Dover International Speedway

We have presented NASCAR-sanctioned racing events for 34 consecutive years at Dover International Speedway and currently promote five major NASCAR-sanctioned events at the facility annually. Two races are in the Winston Cup professional stock car racing circuit, two races are in the Busch Series, Grand National Division (“Busch Series”) racing circuit and one race is in the Craftsman Truck Series racing circuit.

Each of the Busch Series events and the Craftsman Truck Series event at Dover International Speedway are conducted on the days before a Winston Cup event. Dover International Speedway is one of only seven speedways in the country that presents two Winston Cup events and two Busch Series events each year. Additionally, the Company is one of only eight tracks to host three major NASCAR events at one facility on the same weekend. The June and September dates have historically allowed Dover International Speedway to hold the first and last Winston Cup events in the Maryland to Maine region each year.

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Index to Financial Statements

Dover International Speedway is a high-banked, one-mile, concrete superspeedway with a seating capacity for the 2002 season of approximately 140,000. Unlike some superspeedways, substantially all grandstand and skybox seats offer an unobstructed view of the entire track. The concrete racing surface makes Dover International Speedway the only concrete superspeedway (one mile or greater in length) that conducts NASCAR Winston Cup Series events.

Nashville Superspeedway

The Company acquired Nashville Speedway, USA on January 2, 1998. To accommodate the demand for major motorsports in the Nashville area, the Company constructed a new superspeedway and motorsports complex in Wilson County, Tennessee, that opened in April 2001. The 1.33-mile concrete superspeedway has 25,000 permanent grandstand seats with an infrastructure in place to expand to 150,000 seats as demand requires. Additionally, the first phase of construction included lights at the superspeedway to allow for nighttime racing and the foundation work for a dirt track, short track and drag strip, which may be completed in the future. Nashville Superspeedway promoted two NASCAR Busch Series events, a NASCAR Craftsman Truck Series event, an IRL event and other regional and national touring events during the 2002 season.

Grand Prix Association of Long Beach

The Company acquired Grand Prix Association of Long Beach, Inc. (“Grand Prix”) on July 1, 1998. For the past 28 years, Grand Prix has organized and promoted the CART-sanctioned Grand Prix of Long Beach, an annual temporary circuit professional motorsports event run in the streets of Long Beach, California. The Grand Prix of Long Beach has the second highest paid attendance of any Indy-style car race, second only to the Indianapolis 500.

Grand Prix organizes and promotes the Grand Prix of Denver in Denver, Colorado. The Grand Prix of Denver is a CART-sanctioned event held during Labor Day weekend in September. Grand Prix also organizes and promotes the Grand Prix of St. Petersburg in St. Petersburg, Florida. Another of our CART-sanctioned events, the Grand Prix of St. Petersburg had its inaugural event in February 2003 as the first race of the CART season.

Gateway International Raceway

Gateway International Raceway (“Gateway”), acquired in the Grand Prix acquisition, promoted four major events in 2002. These events were sanctioned by NASCAR, IRL and NHRA. The facility also hosts a number of regional and national touring events.

The auto racing facility includes a 1.25-mile paved oval track with 55,000 permanent seats, a nationally renowned drag strip capable of seating approximately 30,000 people and a road course. The facility, which is equipped with lights for nighttime racing, is located in Madison, Illinois, approximately five miles from the Gateway Arch in St. Louis.

Memphis Motorsports Park

Memphis Motorsports Park (“Memphis”), also acquired in the Grand Prix acquisition, promoted three major events in 2002. These events were sanctioned by NASCAR and NHRA. The facility also hosts a number of regional and national touring events.

The auto racing facility includes a 0.75-mile paved tri-oval track with 16,000 permanent seats, a nationally renowned drag strip capable of seating approximated 25,000 people, a 0.25-mile dirt track and a road course. The facility is located in Millington, Tennessee, approximately 10 miles from Memphis, Tennessee.

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Index to Financial Statements

Broadcasting Rights

In recent years, television coverage and corporate sponsorship have increased dramatically for NASCAR-sanctioned events. All NASCAR Winston Cup and Busch Series events sponsored by the Company are currently televised nationally. According to NASCAR, major national corporate sponsorship of NASCAR-sanctioned events has increased significantly in recent years. In fact, there are more Fortune 500 companies involved in NASCAR than in any other sport. DVD’s sponsors include such companies as Anheuser Busch, Dodge, Ford, Kroger, MBNA, Pepsi, Pfizer and RJR Nabisco.

Since the 2001 racing season, NASCAR has negotiated directly with network and cable television companies for the television broadcast rights for Winston Cup and Busch Series events. NASCAR has a six-year agreement with the NBC and Turner networks and an eight-year agreement with Fox and its FX cable network. NASCAR has announced that the industry-wide domestic television broadcast revenues were approximately $259 million for the 2001 race season and will increase at an average annual rate of approximately 17% through the 2006 racing season. Under the terms of its sanction agreements, NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR Winston Cup or Busch Series event as a component of its sanction fees and remits the remaining 90% to the event promoter. The event promoter continues to pay 25% of the gross broadcast rights fees to the event as part of the awards to the competitors.

Competition

The Company’s racing events compete with other racing events sanctioned by various racing bodies and with other sports and recreational events scheduled on the same dates. Racing events sanctioned by different organizations are often held on the same dates at separate tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location, and customer conveniences, among other things, differentiate the motorsports facilities.

Seasonality

DVD derives a substantial portion of its total revenues from admissions, television broadcast rights and other event-related revenue attributable to its major motorsports events held from April through October (beginning in 2003, major motorsports events will be held from February through October). As a result, DVD’s business is highly seasonal.

Employees

As of December 31, 2002, DVD had approximately 176 full-time employees and 44 part-time employees. We engage temporary personnel to assist during our motorsports racing season, many of whom are volunteers. We believe that we enjoy a good relationship with our employees.

Available Information

We file annual, quarterly and current reports, information statements and other information with the SEC. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

Internet Address

We maintain a website where additional information concerning our business and various upcoming events can be found. The address of our Internet website is www.dovermotorsportsinc.com. We provide a link on our website, under Investor Relations, to our filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports.

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Index to Financial Statements

Item 2.    Properties

Dover International Speedway Properties

Dover International Speedway is located in Dover, Delaware, on approximately 747 acres of land owned by the Company. Use by Gaming of our 5/8-mile harness racing track is under an easement granted by the Company which does not require the payment of any rent. Under the terms of the easement Gaming 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 us and is on the inside of our motorsports superspeedway. Gaming’s indoor grandstands are used by us free of charge in connection with our motorsports events. We also lease our principal executive office space from Gaming. Various easements and agreements relative to access, utilities and parking have also been entered into between the Company and Gaming. Effective February 10, 2003, the Company has granted a first mortgage lien on the real property owned by Dover International Speedway to PNC Bank, Delaware, as security for the repayment of principal outstanding under its revolving credit facility.

Nashville Superspeedway Property

Nashville Superspeedway is located on approximately 1,465 acres of land owned by the Company in Wilson County and Rutherford County, Tennessee, approximately 30 miles from downtown Nashville, Tennessee.

Long Beach Properties

Grand Prix owns its office at 3000 Pacific Avenue, Long Beach, California, which consists of approximately 82,000 square feet of land and a building with approximately 50,000 square feet of office and warehouse space. Grand Prix leases a 750-square foot ticket office in downtown Long Beach for the sale of tickets and leases storage facilities in Long Beach for its equipment and structures.

Denver Properties

The Company’s Grand Prix subsidiary leases 4 acres of land in Denver, Colorado for the purpose of storing its equipment and structures used in the Grand Prix of Denver event. A portion of the Grand Prix of Denver is run on property leased to us by the Pepsi Center. In addition, office space is provided to us by the Pepsi Center.

St. Petersburg Properties

The Company’s Grand Prix subsidiary leases office space in St. Petersburg, Florida, and has an agreement with the City of St. Petersburg to lease land in the City for the purpose of storing its equipment and structures used in the Grand Prix of St. Petersburg event.

Gateway International Raceway Property

Gateway International Raceway is located on approximately 416 acres of land in Madison, Illinois, five miles from the Gateway Arch in St. Louis. The Company owns approximately 123 acres and has three long-term leases (expiring in 2011, 2025 and 2070) for an additional 259 acres, with purchase options. The Company is also a party to a ten-year lease (with four five-year renewals) for 20 acres for the purpose of providing overflow parking for major events on a neighboring golf course, and a five-year lease for approximately 14 acres for major event parking. The Company has granted a first mortgage lien on all the real property owned and a security interest in all property leased by the Company at Gateway to Southwestern Illinois Development Authority (“SWIDA”) as security for the repayment of principal and interest on its remaining $19.9 million loan from SWIDA.

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Index to Financial Statements

Memphis Motorsports Park Property

Memphis Motorsports Park is located on approximately 350 acres of land owned by the Company approximately ten miles northeast of downtown Memphis, Tennessee. The facility is encumbered by a first trust deed to First Tennessee Bank for the purpose of securing a stand-by letter of credit issued by First Tennessee Bank to Gateway International Motorsports Corporation to satisfy its debt service reserve fund obligation to SWIDA.

Item 3.    Legal Proceedings

On April 4, 2002, the Illinois Supreme Court ruled that SWIDA exceeded its constitutional authority in its acquisition of certain property which it subsequently conveyed to the Company’s subsidiary, Gateway. SWIDA filed a petition for writ of certiorari with the United States Supreme Court, but the writ was denied on October 7, 2002. The 148.5 acre tract of land at issue was acquired by SWIDA in a quick take eminent domain proceeding and then conveyed to Gateway in 1998 for $900,000 in connection with Gateway’s desire to expand its parking facilities. As all appeal rights have now been exhausted, Gateway will be required to find other property or alternate means to meet its future parking needs. The $900,000 purchase price is expected to be refunded to the Company in 2003. In addition, the owner of the condemned land has indicated that he intends to make a claim for attorney’s fees alleged to approximate $1,200,000. Settlement negotiations have been ongoing, but have been unsuccessful to date. In the event a settlement is not reached, the Company believes that it has viable defenses to and will vigorously contest any such claim.

The Company is also a party to ordinary routine litigation incidental to our business. Management does not believe that the resolution of any of these matters is likely to have a serious negative effect on our results of operations, financial condition or cash flows.

Item 4.    Submission Of Matters To A Vote Of Security Holders

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders.

Part II

Item 5.    Market For The Registrant’s Common Stock And Related Stockholder Matters

The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol “DVD.” There is no public trading market for DVD Class A common stock. However, Class A common stock is freely convertible at any time into shares of common stock on a one-for-one basis at the option of the stockholder. As of February 28, 2003, there were 16,344,475 shares of common stock and 23,448,585 shares of Class A common stock outstanding. There were 1,274 holders of record for common stock and 16 holders of record for Class A common stock.

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Index to Financial Statements

The range of closing share prices for the Company’s common stock on the New York Stock Exchange and the dividends declared for the years ended December 31, 2002 and 2001 are as follows:

For comparison purposes, after the March 31, 2002 tax-free spin-off of Gaming to the Company’s stockholders, the historical market value of the Company’s common stock is not meaningful since the historical values included Gaming. Similarly, a comparison of the historical dividend payout prior to the spin-off should factor in the effect of the spin-off.

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Index to Financial Statements

Item 6.    Selected Financial Data

The following table summarizes certain selected historical financial data and should be read in conjunction with the Consolidated Financial Statements and the notes thereto included elsewhere in this document. The historical financial information presented below is not necessarily indicative of the results of operations or financial position that DVD would have reported if it had operated exclusive of its discontinued gaming operation during the periods presented or in the future. See NOTE 2–Discontinued Operation appearing in the Notes to the Consolidated Financial Statements on page 35 of this Annual Report on Form 10-K.

Five Year Selected Financial Data

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Index to Financial Statements

Item 7.    Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

The following discussion is based upon and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. For purposes of comparing the year ended December 31, 2001 and the six-month period ended December 31, 2000 with the same periods from the prior year, the Company has relied upon consolidated financial statements that are not presented elsewhere in this document.

On March 31, 2002, DVD completed the tax-free spin-off of Dover Downs Gaming & Entertainment, Inc., its gaming business. Accordingly, the operations of this business have been reflected as a discontinued operation and excluded from consolidated revenues and expenses for all years in the accompanying consolidated financial statements and our discussions herein.

Results of Operations

We generate revenues primarily from admissions to racing events and motorsports activities held at our facilities; television, radio and ancillary rights fees; sponsorship fees; luxury suite rentals; concessions revenue from concession stands, hospitality catering and commissions paid by third-party vendors for the right to sell concessions at our facilities; and sales of souvenirs, programs and vendor commissions from the right to sell souvenirs at our facilities.

Our expenses include prize and point fund monies and sanction fees paid to various sanctioning bodies, including NASCAR, labor, advertising, cost of goods sold for merchandise and souvenirs, and other expenses associated with the promotion of our racing events.

Year Ended December 31, 2002 vs. Year Ended December 31, 2001

Revenues increased by $7,180,000, or 8.3%, to $93,731,000, primarily the result of increased admissions, broadcast revenue and other event related revenue at Dover International Speedway’s spring and fall NASCAR weekends, the inaugural Grand Prix of Denver event and the addition of a second Busch Series event at Nashville Superspeedway. The increases in revenues were partially offset by a decline in admissions and other event related revenue at the Company’s Grand Prix of Long Beach event, at the IRL and NASCAR Craftsman Truck and April Busch Series events at Nashville Superspeedway and at the NASCAR Busch Series events at Gateway and Memphis.

Operating and marketing expenses increased by $10,180,000, or 20.0%, in 2002 compared with 2001, primarily due to increased purse and sanction fee expenses related to Dover International Speedway’s spring and fall NASCAR weekends, as well as at the Company’s other facilities, the Nashville Superspeedway being operational for all of 2002 compared with only nine months for the comparable period of 2001, the addition of a second Busch Series event at Nashville Superspeedway in 2002 and the inaugural Grand Prix of Denver event in September 2002.

Depreciation and amortization expense decreased by $237,000 primarily due to the adoption of Financial Accounting Standards Board (“FASB”) Statement No. 142 which reduced the Company’s goodwill amortization expense by $1,454,000 in 2002 as compared to 2001. This decrease in amortization expense was partially offset by depreciation related to the opening of Nashville Superspeedway in April 2001, the addition of grandstand seats at Dover International Speedway in June 2001, depreciation associated with assets acquired for the inaugural Grand Prix of Denver event, and improvements at Dover International Speedway and Nashville Superspeedway in June 2002.

General and administrative expenses increased by $4,705,000 to $16,113,000 from $11,408,000 in 2001, primarily due to the Nashville Superspeedway being operational for all of 2002 compared with only nine months for the comparable period of 2001 and an increase in wages and related employee benefits, insurance, non-income taxes and pre-opening expenses related to the inaugural Grand Prix of Denver event and the inaugural Grand Prix of St. Petersburg event which occurred in February 2003. Additionally, the Company wrote-off $243,000 of costs related to the attempted acquisition of additional land for parking facilities at Gateway. On April 4, 2002, the Illinois Supreme Court ruled that Southwestern Illinois Development Authority (“SWIDA”) exceeded its constitutional authority in

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Index to Financial Statements

its acquisition of a 148.5 acre tract of land in a quick take eminent domain proceeding. The land was subsequently conveyed to Gateway in 1998. SWIDA filed a petition for writ of certiorari with the United States Supreme Court, but the writ was denied on October 7, 2002. Since all appeal rights have now been exhausted, capitalized costs of $243,000 associated with acquiring the land were charged to expense in 2002. The owner of the condemned land has indicated that he intends to make a claim for attorney’s fees alleged to approximate $1,200,000. Settlement negotiations have been ongoing, but have been unsuccessful to date. In 2002, the Company expensed and accrued $820,000 for resolution of this matter and for the settlement of another unrelated claim. In the event a settlement is not reached on the former claim, the Company believes that it has viable defenses to and will vigorously contest any such claim. The Company settled the latter claim in January 2003.

Net interest expense increased by $2,893,000 primarily the result of the Company capitalizing $1,531,000 of interest related to the construction of major facilities in 2001 and the amortization of origination fees related to the Company’s credit facility entered into in February 2002. No interest was capitalized in 2002. Capitalization of interest on Nashville Superspeedway ceased when the facility opened in April 2001. Additionally, the 2001 pre-spin-off capital structure did not include as much indebtedness.

The Company’s effective income tax rates for 2002 and 2001 were 37.6% and 45.6%, respectively. The decrease in 2002 resulted primarily from net operating losses for state income tax purposes and the adoption of FASB Statement No. 142, Goodwill and Other Intangible Assets, which requires that goodwill and intangible assets with indefinite useful lives no longer be amortized. In 2001, the Company amortized $1,454,000 of goodwill for financial reporting purposes that was not deductible for income tax purposes resulting in a permanent difference that increased the effective tax rate. These decreases in the effective tax rate were partially offset by the recording of a valuation allowance of $163,000, net of federal tax benefit, relating to state net operating loss carry-forwards that may expire prior to being realized.

Earnings from continuing operations before cumulative effect of accounting change decreased by $5,460,000, primarily the result of the lower revenues at the Company’s Grand Prix of Long Beach event, at the IRL and NASCAR Craftsman Truck and April Busch Series events at Nashville Superspeedway and the NASCAR Busch Series events at Gateway and Memphis, the increased general and administrative expenses and increased interest expense discussed above. Earnings from continuing operations were also negatively impacted by the $243,000 write-off of deferred costs and an $820,000 accrual related to the resolution of the SWIDA matter discussed above and the settlement of another unrelated claim. The decreases in earnings from continuing operations were offset by an increase in profitability at Dover International Speedway’s spring and fall NASCAR weekends, the addition of a second Busch Series event at Nashville Superspeedway and a decrease in amortization expense of $1,454,000 due to the adoption of FASB Statement No. 142.

Earnings from discontinued operation (net of income taxes) were $4,477,000 in 2002 compared to $21,095,000 in 2001. The Company’s tax-free spin-off of its gaming business became effective March 31, 2002 and as a result, earnings from discontinued operation were no longer recognized by the Company subsequent to that date.

The Company recorded a non-cash charge of $28,606,000 as a cumulative effect of an accounting change for the write-off of goodwill associated with the Grand Prix Association of Long Beach, Inc. (“Grand Prix”), a wholly owned subsidiary, in 2002. The charge resulted from the adoption of FASB Statement No. 142, Goodwill and Other Intangible Assets, which requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested at least annually for impairment. Goodwill associated with Grand Prix, which was acquired through a tax-free merger, is not deductible for income tax purposes and represents a permanent difference for which no current or deferred income tax liabilities are recorded. As such, no income tax benefit was recognized from the impairment write-off.

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Index to Financial Statements

Year Ended December 31, 2001 vs. Year Ended December 31, 2000

Revenues increased by $3,847,000, or 4.7%, to $86,551,000, primarily the result of events at the new Nashville Superspeedway and record attendance and increased broadcast revenue for the Company’s NASCAR Winston Cup events at Dover International Speedway. The increases in motorsports revenue were offset by decreased attendance at certain motorsports events at the Company’s other facilities and unusually inclement weather that negatively impacted nine of the sixteen major motorsports events promoted by the Company during the year ended December 31, 2001.

Operating and marketing expenses increased $6,894,000, or 15.7%, for 2001 compared with 2000, primarily the result of events promoted for the first time at the new Nashville Superspeedway, which opened in April 2001, and pre-opening expenses related to the inaugural Grand Prix of Denver which occurred in September 2002.

Depreciation and amortization expense increased by $2,441,000 primarily due to the opening of the Nashville Superspeedway complex in April 2001 and the addition of grandstand seats at Dover International Speedway in June 2001.

General and administrative expenses increased by $2,302,000 to $11,408,000 from $9,106,000 in 2000, primarily due to the opening of the Nashville Superspeedway complex in April 2001.

Net interest expense increased by $1,498,000 primarily as a result of the Company capitalizing $1,531,000 of interest related to the construction of major facilities in 2001 compared with $3,045,000 in 2000. Capitalization of interest on the new Nashville Superspeedway ceased when the facility opened in April 2001.

The Company’s effective income tax rates for the years ended December 31, 2001 and 2000 were 45.6% and 43.0%, respectively. The increase resulted primarily from lower earnings from continuing operations before income taxes magnifying the impact of goodwill amortization that is not deductible for income tax purposes.

Earnings from continuing operations decreased by $5,627,000, primarily as a result of unusually inclement weather negatively impacting attendance at nine of the major motorsports events promoted by the Company during 2001, and increased depreciation, interest and general and administrative expenses related to the opening of the Nashville Superspeedway in April 2001, offset by increased earnings from Dover International Speedway.

Earnings from discontinued operation (net of income taxes) were $21,095,000 in 2001 as compared to $21,568,000 in 2000. The decrease of $473,000, or 2.2%, was primarily due to increased general and administrative costs from pre-opening expenses related to the Dover Downs Hotel and Conference Center and increased interest expense related to the construction of the Dover Downs Hotel and Conference Center, offset by increased play in the casino. Also, prior year operating expenses were reduced by $2,475,000 as a result of the Company reversing a portion of prior accruals for disputed management fees.

Six Months Ended December 31, 2000 Compared With Six Months Ended December 31, 1999

Revenues increased by $5,393,000, or 16.0%, to $39,045,000. Approximately $465,000 of the revenue increase resulted from increased attendance, $222,000 from increased ticket prices and $2,889,000 from increased sponsorship and broadcast revenues from the NASCAR-sanctioned events at Dover International Speedway. The remainder of the revenue increase is primarily from adding a Craftsman Truck Series event to the Dover fall NASCAR weekend and the scheduling of the CART event at Gateway International Raceway in September 2000 compared with May 1999. The increases in revenues were offset somewhat by the Company’s decision not to promote an IRL event at Dover International Speedway during the six-month period ended December 31, 2000, and the scheduling of the Craftsman Truck Series event at Gateway International Raceway in May 2000 compared with September 1999.

Operating and marketing expenses increased by $2,005,000 principally due to the addition of a Craftsman Truck Series event to the Dover fall NASCAR weekend, the scheduling of the CART event at Gateway International Raceway in September 2000 compared with May 1999 and pre-opening expenses attributable to Nashville Superspeedway. The increases in operating expenses were offset somewhat by the Company’s decision not to promote an IRL event at Dover International Speedway during the six-month period ended December 31, 2000 and

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Index to Financial Statements

the scheduling of the Craftsman Truck Series event at Gateway International Raceway in May 2000 compared with September 1999.

Depreciation and amortization increased by $911,000, or 29.5%, from capital expenditures related to the Company’s various motorsports facilities completed during the six-month period ended December 31, 2000 and the year ended June 30, 2000.

General and administrative expenses increased by $528,000 to $4,661,000 from $4,133,000, primarily due to expenses of approximately $500,000 attributable to Nashville Superspeedway pre-opening costs and a legal settlement.

Net interest expense was $9,000 during the six-month period ended December 31, 2000 compared with $817,000 during the six-month period ended December 31, 1999. The Company capitalized $1,890,000 and $658,000 of interest during the six-month periods ended December 31, 2000 and 1999, respectively, related to the construction of major facilities.

Our effective income tax rates were 44.8% and 44.9% for the six-month periods ended December 31, 2000 and 1999, respectively.

Earnings from continuing operations increased by $1,527,000 primarily due to higher attendance and related revenues as well as an increase in the broadcast rights fees for the NASCAR-sanctioned motorsports events presented at Dover International Speedway and the scheduling of the CART-sanctioned event at Gateway International Raceway.

Earnings from discontinued operation (net of income taxes) were $11,056,000 in the six-month period ended December 31, 2000 as compared to $10,442,000 in the six-month period ended December 31, 1999. The increase of $614,000, or 5.9%, was primarily due to increased play in the casino and the reversal of a portion of prior accruals for disputed management fees related to our casino operations.

Fiscal Year 2000 Compared With Fiscal Year 1999

Revenues increased by $8,628,000, or 12.6%, to $77,311,000. Approximately $2,214,000 of the revenue increase resulted from increased attendance and $995,000 from increased ticket prices for the NASCAR-sanctioned events at Dover International Speedway. The remainder of the increase was principally from increased broadcast rights fees, sponsorship, concessions and marketing-related revenues at Dover International Speedway and the addition of a Busch Series event at Memphis Motorsports Park in the second quarter of fiscal 2000. The increases in revenues were offset somewhat by the rescheduling of the CART-sanctioned event at Gateway International Raceway to September 2000 compared with May 1999.

Operating and marketing expenses increased by $4,846,000 principally due to a $2,319,000 increase in purse and sanction fee expenses at Dover International Speedway, and from the addition of a Busch Series event at Memphis Motorsports Park in the second quarter of fiscal 2000, offset by the rescheduling of the CART-sanctioned event at Gateway International Raceway.

Depreciation and amortization increased by $842,000, or 14.4%, due to capital expenditures related to the Company’s various motorsports facilities completed in fiscal 2000 and 1999.

General and administrative expenses increased by $59,000 to $8,578,000 from $8,519,000, primarily due to the growth at the Company’s various motorsports facilities. As a percentage of total revenues, the Company’s general and administrative costs decreased to 11.1% from 12.4% in fiscal 1999.

Net interest expense was $924,000 in fiscal 2000 compared to $1,267,000 in fiscal 1999. The decreased interest expense resulted from borrowings on the Company’s revolving credit agreement, offset by the capitalization of $1,814,000 and $414,000 of interest in fiscal 2000 and 1999, respectively, related to the construction of major facilities.

Our effective income tax rates were 42.7% and 42.3% for the fiscal years ended June 30, 2000 and 1999, respectively.

12

Index to Financial Statements

Earnings from continuing operations increased by $1,778,000, primarily due to higher attendance and related revenues as well as an increase in the broadcast rights fees for the NASCAR-sanctioned motorsports events presented at Dover International Speedway and the addition of a Busch Series event at Memphis Motorsports Park, offset by the rescheduling of the CART-sanctioned event at Gateway International Raceway from May to September.

Earnings from discontinued operation (net of income taxes) were $20,952,000 for the fiscal year ended June 30, 2000 as compared to $17,696,000 for the fiscal year ended June 30, 1999. The increase of $3,256,000, or 18.4%, was primarily due to increased levels of play in the casino.

Liquidity and Capital Resources

Net cash provided by continuing operations was $21,778,000 for the year ended December 31, 2002 compared to $16,002,000 for the year ended December 31, 2001. The increase in 2002 as compared to 2001 was primarily due to an increase in deferred income tax liabilities relating to the difference between book and tax depreciation expense at Nashville Superspeedway and the timing of certain construction payments related to Nashville Superspeedway. Additionally, depreciation and amortization expense of $10,011,000 and $10,023,000 in 2002 and 2001, respectively, was added back to net earnings to calculate net cash provided by continuing operations. The increases in net cash provided by continuing operations were offset by a reduction in earnings from continuing operations before cumulative effect of accounting change and depreciation and amortization expense from $16,894,000 in 2001 to $10,731,000 in 2002, and the timing of invoicing to and receipts from customers.

Net cash used in investing activities was $9,689,000 for the year ended December 31, 2002 compared to $19,729,000 for the year ended December 31, 2001. The decrease in 2002 was primarily due to the completion of Nashville Superspeedway in April 2001 and the reduction or deferral of capital projects in 2002.

Net cash used in financing activities was $12,853,000 for the year ended December 31, 2002 as compared to net cash provided by financing activities of $44,608,000 for the year ended December 31, 2001. The change from 2002 to 2001 was primarily due to reduced borrowings under the Company’s revolving credit agreement since the majority of the 2001 borrowings were for construction of Nashville Superspeedway and projects undertaken by the Company’s gaming segment prior to the Company completing its spin-off of that segment on March 31, 2002.

Partially offsetting the reduced borrowings, certain existing shareholders of the Company acquired from the Company 1,453,500 shares of its common stock in August 2002 for net proceeds of $6,203,000. The shares of common stock were sold in an unregistered private offering to accredited investors at fair value based on the closing market price of the Company’s common stock on the day preceding the sale, which was $4.30 per share. The Company used the proceeds of the sale of common stock to pay down a portion of its borrowings under its revolving credit agreement. Additionally, the Company paid $3,631,000 in regular quarterly cash dividends in 2002.

As of December 31, 2002, the Company had a $105,000,000 unsecured credit facility that expires on February 19, 2005. Interest is based, at the Company’s option, upon LIBOR or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%), plus a margin determined by the Company’s leverage ratio. This facility does not include Dover Downs, Inc., as it was spun-off effective March 31, 2002. A total of $45 million of the amount outstanding under the previous DVD credit facilities was paid down on April 1, 2002 through a new credit facility that was established by Gaming. The terms of the DVD credit facility contain certain covenants including minimum tangible net worth, fixed charge coverage and maximum leverage ratio requirements. The Company would not have been in compliance with the leverage ratio covenant at December 31, 2002, but on January 27, 2003 the Company and its banks amended this covenant effective December 31, 2002 and through the expiration date of the facility. As a result of the amendment, the Company is in compliance with the leverage ratio covenant and expects to be in compliance with the covenants throughout 2003. Material adverse changes in the Company’s results of operation would impact its ability to maintain financial ratios necessary to satisfy these requirements. The facility is for seasonal funding needs, capital improvements and other general corporate purposes, and is guaranteed by all of the Company’s subsidiaries. At December 31, 2002, there was $51,515,000 outstanding under the facility at a weighted average interest rate of 4.46%. After consideration of stand-by letters of credit outstanding, borrowings of $27,566,000 were available pursuant to the facility at December 31, 2002.

13

Index to Financial Statements

The amendment to the Company’s credit agreement also reduced the facility to $85,000,000 effective January 27, 2003, and reduces it to $80,000,000 effective September 30, 2003. The amendment also revised the fixed charge coverage ratio effective December 31, 2002, and secured the credit facility with a first mortgage lien on the real property owned by the Company’s wholly owned subsidiary, Dover International Speedway, effective February 10, 2003. In the event that the Company meets certain leverage ratio covenant requirements for two consecutive fiscal quarters, the mortgage will be released.

The Company expects capital expenditures of approximately $5,000,000-$6,000,000 during 2003. These projects primarily relate to improvements necessary to promote our inaugural Grand Prix of St. Petersburg event held on February 23, 2003, as well as, various improvements at our fixed facilities. The Company expects that its net cash flows from operating activities and funds available from its credit facility will be sufficient to provide for its working capital needs and capital spending requirements at least through 2003, as well as any cash dividends the board of directors may declare. Additionally, we would expect cash flows from operating activities and funds available from our credit facility to also provide for long-term liquidity.

On January 29, 2003, the Board of Directors of the Company declared a quarterly cash dividend on both classes of common stock of $0.01 per share. The dividend was paid on March 10, 2003 to shareholders of record at the close of business on February 10, 2003.

Contractual Obligations

At December 31, 2002, the Company had the following contractual obligations and other commercial commitments:

In conjunction with the construction of the Company’s Nashville facility, DVD issued a $25,919,000 stand-by letter of credit to guarantee Variable Rate Tax Exempt Infrastructure Revenue Bonds, Series 1999, issued by the Sports Authority of Wilson, Tennessee in the amount of $25,900,000, of which $25,500,000 is outstanding on December 31, 2002. The proceeds from the bonds were used to acquire, construct and develop certain public infrastructure improvements in Wilson County, Tennessee, benefiting our Nashville Superspeedway. Interest only payments were required until September 1, 2002, and were made from a capitalized interest fund established from the bond proceeds. The principal payments range from $400,000 in September 2002 to $1,600,000 in 2029. The capitalized interest fund was depleted in September 2002, at which time the debt service on the bonds became payable solely from sales taxes and incremental property taxes generated from the facility. If the taxes are insufficient for the payment of principal and interest on the bonds, payments would be made pursuant to the letter of credit. The Company believes that the sales taxes and incremental property taxes generated from the facility will satisfy the necessary debt service requirements of the bonds. As of December 31, 2002, $1,145,000 was available in the sales and incremental property tax fund maintained by Wilson County to pay the remaining principal and interest due under the bonds. During 2002, $1,222,000 was paid by the Company into the sales and incremental property tax fund and $785,000 was deducted from the fund for debt and interest service. In 2003, we expect the payments into the fund to exceed the debt and interest service. If the debt service is not satisfied from the sales and incremental property taxes generated from the facility, the bonds would become a liability of the Company. If we fail to maintain the letter of credit that secures the bonds or we allow an uncured default to exist under our reimbursement agreement relative to the letter of credit, the bonds would be immediately redeemable.

14

Index to Financial Statements

Grand Prix entered into an agreement (the “SWIDA loan”) with Southwestern Illinois Development Authority (“SWIDA”) to receive the proceeds from the “Taxable Sports Facility Revenue Bonds, Series 1996 (Gateway International Motorsports Corporation Project)”, a Municipal Bond Offering, in the aggregate principal amount of $21,500,000, of which $19,914,000 is outstanding on December 31, 2002. The offering of the bonds closed on June 21, 1996. The repayment terms and debt service reserve requirements of the bonds issued in the Municipal Bond Offering correspond to the terms of the SWIDA loan. SWIDA loaned all of the proceeds from the Municipal Bond Offering to Grand Prix for the purpose of the redevelopment, construction and expansion of Gateway International Raceway (“Gateway”), and the proceeds of the SWIDA loan were irrevocably committed to complete construction of Gateway, to fund interest, to create a debt service reserve fund and to pay for the cost of issuance of the bonds. The Company has established certain restricted cash funds to meet debt service as required by the SWIDA loan, which are held by the trustee (BNY Trust Company of Missouri). At December 31, 2002, $3,683,000 of the Company’s cash balance is restricted by the SWIDA loan and is appropriately classified as a non-current asset in the accompanying consolidated balance sheet. The SWIDA loan is secured by a first mortgage lien on all the real property owned and a security interest in all property leased by Gateway. Also, the SWIDA loan is unconditionally guaranteed by Grand Prix. The SWIDA loan bears interest at varying rates ranging from 8.35% to 9.25% with an effective rate of approximately 8.91%. The structure of the bonds permits amortization from February 1997 through February 2017 with debt service beginning in 2000 following interest only payments from February 1997 through August 1999. A stand-by letter of credit for $2,502,000, which is secured by a trust deed on the Company’s facilities in Memphis, Tennessee, also was obtained to satisfy debt service reserve fund obligations. In addition, a portion of the property taxes to be paid by Gateway (if any) to the City of Madison Tax Incremental Fund have been pledged to the annual retirement of debt and payment of interest.

Related Party Transactions

During the year ended December 31, 2002, Gaming allocated corporate costs of $495,000 to DVD. As of December 31, 2002, DVD’s consolidated balance sheet included a $793,000 payable to Gaming for these costs and for other payments made by Gaming on DVD’s behalf. The allocation was based on both an allocation to the business that directly incurred the costs and an analysis of each company’s share of the costs. 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 separate, independent entities and/or had otherwise independently managed these functions; however, management believes that these allocations are reasonable.

During the third quarter of 2002, under the Tax Sharing Agreement, Gaming paid the Company $2,700,000 for its portion of the 2002 consolidated federal income tax liability. Since the spin-off was effective on March 31, 2002, the Company’s 2002 federal income tax return will include the operations of Gaming for the first quarter of the year.

Use by Gaming of our 5/8-mile harness racing track is under an easement granted by us and does not require the payment of any rent. Under the terms of the easement Gaming 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 us and is on the inside of our motorsports superspeedway. Gaming’s indoor grandstands are used by us free of charge in connection with our motorsports events. We also lease our principal executive office space from Gaming. Various easements and agreements relative to access, utilities and parking have also been entered into between the Company and Gaming.

In conjunction with the spin-off, the Company and Gaming entered into various agreements that address the allocation of assets and liabilities between the two companies and that define the companies’ relationship after the separation. The Transition Support Services Agreement provides for each of the Company and Gaming to provide each other with certain administrative and operational services subsequent to the spin-off. 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. Refer to NOTE 2 – Discontinued Operation of the Consolidated Financial Statements included elsewhere in this Form 10-K for further discussion.

15

Index to Financial Statements

In August 2002, certain existing shareholders of the Company, including two directors, acquired from the Company 1,453,500 shares of its common stock for net proceeds of $6,203,000. The shares of common stock were sold in an unregistered private offering to accredited investors at fair value based on the closing market price of the Company’s common stock on the day preceding the sale which was $4.30 per share.

At the date of the acquisition of Grand Prix, $299,000 was due to Grand Prix from certain shareholders/officers for outstanding loans made for the purpose of purchasing Grand Prix common stock. As of December 31, 2001, $92,000 was outstanding from a director of the Company. This remaining balance was repaid in full in January 2002.

Critical Accounting Policies

The accounting policies described below are those the Company considers critical in preparing its consolidated financial statements. These policies include significant estimates made by management using information available at the time the estimates are made. However, as described below, these estimates could change materially if different information or assumptions were used. The descriptions below are summarized and have been simplified for clarity.

Goodwill

The Company has made acquisitions in the past that included goodwill. Under accounting principles generally accepted in the United States of America in effect through December 31, 2001, these assets were amortized over their estimated useful lives, and were tested periodically to determine if they were recoverable from operating earnings on an undiscounted basis over their useful lives.

Effective January 1, 2002, goodwill is no longer amortized but is subject to an annual (or under certain circumstances more frequent) impairment test based on its estimated fair value. Estimated fair value is typically less than values based on undiscounted operating earnings because fair value estimates include a discount factor in valuing future cash flows. We completed our analysis of impairment of our goodwill during the second quarter of 2002, as a result of adopting the transitional provisions of Statement No. 142, and recorded a non-cash charge of $28,606,000. We completed the annual impairment test in November 2002 and determined that there was no additional impairment. Additional impairment losses could be recorded in the future. There are many assumptions and estimates underlying the determination of this impairment loss. Another estimate using different, but still reasonable, assumptions could produce a significantly different result. At December 31, 2002, the remaining balance of goodwill is $21,883,000

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The Company records a tax valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Currently, the Company maintains a valuation allowance on deferred tax assets related to certain state net operating loss carry-forwards. The Company has considered ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event the Company were to determine that it would be able to realize all or a portion of these deferred tax assets, an adjustment to the deferred tax asset would increase earnings in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or a portion of its remaining deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such determination was made. At December 31, 2002, the Company had deferred tax assets of $7,678,000, net of an allowance of $163,000. Overall, the Company has a net deferred tax liability of $34,999,000.

16

Index to Financial Statements

Accrued Pension Cost

The benefits provided by the Company’s defined benefit pension plans are based on years of service and employee’s remuneration over their employment with the Company. The Company establishes accrued pension costs in accordance with the provisions of FASB Statement No. 87, Employers’ Accounting for Pensions. Accrued pension costs are developed using actuarial principles and assumptions which consider a number of factors, including estimates for discount rate, assumed rate of compensation increase, and expected long-term rate of return on assets. Changes in these estimates would impact the amounts that the Company records in its consolidated financial statements.

Accounts Receivable Reserves

The Company provides for losses on accounts receivable based upon their current status, historical experience and management’s evaluation of existing economic conditions. Significant changes in customer profitability or general economic conditions may have a significant effect on the Company’s allowance for doubtful accounts.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is provided for financial reporting purposes using the straight-line method over estimated useful lives ranging from 5 to 10 years for furniture, fixtures and equipment and up to 40 years for facilities. These estimates require assumptions that are believed to be reasonable. Long-lived assets are evaluated for impairment annually and when an event occurs that indicates an impairment may exist.

Recent Accounting Pronouncements

In June 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible Assets. Statement No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of Statement No. 142. The Company adopted the provisions of Statement No. 142 effective January 1, 2002, at which time the Company ceased to record amortization expense related to its goodwill. The adoption of Statement No. 142 resulted in a $1,454,000 reduction in amortization expense in 2002 as compared to 2001. To comply with the transitional provisions of Statement No. 142, we determined our reporting units and assigned goodwill and other net assets to those reporting units. Goodwill attributable to each of our reporting units at January 1, 2002 was tested for impairment by comparing the fair value of each reporting unit with its carrying value. Fair value was primarily determined through the use of a discounted cash flow methodology from an independent appraisal. To the extent fair value was determined to be less than the carrying value, fair value was then allocated to identifiable tangible and intangible assets resulting in an implied valuation of the goodwill associated with the reporting unit. Based on this analysis of goodwill, the Company recorded a non-cash charge of $28,606,000 associated with the goodwill of Grand Prix as a cumulative effect of an accounting change for the write-off of goodwill in 2002. Goodwill associated with Grand Prix, which was acquired through a tax-free merger, is not deductible for income tax purposes and represents a permanent difference for which no current or deferred income tax liabilities are recorded. As such, no income tax benefit was recognized from the impairment write-off.

In June 2001, the FASB issued Statement No. 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) normal use of the asset. Statement No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, a gain or loss on settlement would be recognized. We are required and plan to adopt the provisions of Statement No. 143 in 2003. The adoption of Statement No. 143 is not expected to have a significant impact on our results of operations, financial position or cash flows.

17

Index to Financial Statements

In August 2001, the FASB issued Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. While Statement No. 144 supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, it retains many of the fundamental provisions of that Statement. Statement No. 144 also supersedes the accounting and reporting provisions of Accounting Principles Board (“APB”) Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business. However, it retains the requirement in Opinion No. 30 to report separately discontinued operations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or is classified as held for sale. We adopted the provisions of Statement No. 144 effective January 1, 2002. The adoption of Statement No. 144 did not have a significant impact on our results of operations, financial position or cash flows.

On April 30, 2002, the FASB issued Statement No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The Statement updates, clarifies and simplifies existing accounting pronouncements. Statement No. 145 rescinds Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion 30 will now be used to classify those gains and losses. Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements, amended Statement No. 4, and is no longer necessary because Statement 4 has been rescinded. Statement No. 145 amends Statement No. 13, Accounting for Leases, to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. Certain provisions of Statement No. 145 are effective for fiscal years beginning after May 15, 2002, while other provisions are effective for transactions occurring after May 15, 2002. The adoption of Statement No. 145 is not expected to have a significant impact on our results of operations, financial position or cash flows.

In June 2002, the FASB issued Statement No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and nullifies Emerging Issues Task Force (“EITF”) 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The Company adopted Statement No. 146 in January 2003. The adoption of Statement No. 146 did not have a significant impact on our results of operations, financial position or cash flows.

In December 2002, the FASB issued Statement No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an amendment of FASB Statement No. 123. Statement No. 148 amends Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, Statement No. 148 amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition guidance and annual disclosure provisions of Statement No. 148 are effective for financial statements issued for fiscal years ending after December 15, 2002. The interim disclosure provisions are effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. We have applied the disclosure provisions in Statement No. 148 in our 2002 consolidated financial statements and the accompanying notes included elsewhere in this report. The adoption of Statement No. 148 is not expected to have a significant impact on our results of operations, financial position or cash flows because the Company does not expect to adopt the fair value method of accounting.

EITF Issue No. 02-13, Deferred Income Tax Considerations in Applying the Goodwill Impairment Test in FASB Statement No. 142, ‘Goodwill and Other Intangible Assets,’ requires that deferred income taxes be included in the carrying amount of a reporting unit for the purposes of the first step of the FASB Statement No. 142 goodwill impairment test and provides guidance for determining whether to estimate the fair value of a reporting unit by assuming that the unit could be bought or sold in a non-taxable transaction versus a taxable transaction and the income tax bases to use based on this determination. EITF No. 02-13 is effective for goodwill impairment tests performed after September 12, 2002. The Company considered the impact of EITF No. 02-13 on its impairment test in November 2002.

18

Index to Financial Statements

In November 2002, the FASB issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others an Interpretation of FASB Statements No. 5, 57 and 107 and Recission of FASB Interpretation No. 43 (“FIN 45”). FIN 45 requires that a guarantor recognize, at the inception of certain guarantees, a liability for the fair value of the obligation undertaken in issuing such guarantee. FIN 45 also requires additional disclosure requirements about a guarantor’s obligations under certain guarantees that it has issued. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002 and the disclosure requirements are effective for financial statement periods ending after December 15, 2002. We added certain disclosures in our 2002 financial statements to reflect the guidance proscribed in FIN 45; however, the adoption of FIN 45 is not expected to have a significant impact on our results of operations, financial position or cash flows.

Factors That May Affect Operating Results; Forward-Looking Statements

In addition to historical information, this Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to our financial condition, profitability, liquidity, resources, business outlook, proposed acquisitions, market forces, corporate strategies, consumer preferences, contractual commitments, legal matters, capital requirements and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. To comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ substantially from the anticipated results or other expectations expressed in our forward-looking statements. When words and expressions such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable,” or similar words or expressions are used in this document, as well as statements containing phrases such as “in our view,” “there can be no assurance,” “although no assurance can be given,” or “there is no way to anticipate with certainty,” forward-looking statements are being made.

Various risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to differ materially from those set forth in our forward-looking statements, including the following factors:

19

Index to Financial Statements

We undertake no obligation to publicly update or revise any forward-looking statements as a result of future developments, events or conditions. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ significantly from those forecast in any forward-looking statements. Given these risks and uncertainties, stockholders should not overly rely or attach undue weight to our forward-looking statements as an indication of our actual future results.

Our Relationship With Sanctioning Bodies Is Vital To Our Success In Motorsports

Our continued success in motorsports is dependent upon keeping a good working relationship with the governing bodies of motorsports that sanction national racing events. These governing bodies include NASCAR, CART, IRL and NHRA. The governing bodies regularly issue and award sanctioned events and their issuance depends, in large part, on maintaining good working relationships with the sanctioning bodies. Many events are sanctioned on an annual basis with no obligation to renew, including our agreements with NASCAR. By awarding a sanctioned event or a series of sanctioned events, the sanctioning bodies do not warrant, nor are they responsible for, the financial success of any sanctioned event. Our inability to obtain additional sanctioned events in the future and to maintain sanction agreements at current levels would likely result in lower than anticipated revenues from admissions, sponsorships, hospitality, concessions, and merchandise, which could have a material adverse effect on our business, financial condition and results of operations.

We Rely On Sponsorship Contracts To Generate Revenues

We receive a substantial portion of our annual revenues from sponsorship agreements, including the sponsorship of our various events and our permanent venues, such as “title,” “official product” and “promotional partner” sponsorships, billboards, signage and skyboxes. Loss of our title sponsors or other major sponsorship agreements or failure to secure such sponsorship agreements in the future could have a material adverse effect on our business, financial condition and results of operations.

Increased Government Regulation Of Sponsors And Restrictions On Advertising Could Substantially Reduce Our Advertising Revenue

We receive a significant portion of our revenue from sponsorship and advertising by various companies. Tobacco and liquor companies have traditionally sponsored motorsports events. In 1999, major tobacco companies entered into an agreement with federal negotiators and various states attorneys general whereby the tobacco companies agreed to give up certain advertising and promotional activity in exchange for liability limits in pending and future lawsuits. New laws or settlements could have a material adverse effect on the tobacco and liquor industry motorsports sponsorship and advertising expenditures. Government regulations and restrictions on advertising by tobacco companies, liquor companies and other potential sponsors could adversely impact revenues as well as the revenues of the motorsports industry as a whole. While we believe that the popularity of motorsports would allow us and the industry to secure alternate sponsors, there is no assurance that alternate sponsors could be obtained.

Our Motorsports Events Face Intense Competition For Attendance, Television Viewership And Sponsorship

We compete with other auto speedways for the patronage of motor racing spectators as well as for promotions and sponsorships. Moreover, racing events sanctioned by different organizations are often held on the same dates at different tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location and customer conveniences, among other things, distinguish the motorsports facilities. In addition, all of our events compete with other sports and recreational events scheduled on the same dates. As a result, our revenues and

20

Index to Financial Statements

operations are affected not only by our ability to compete in the motorsports promotion market, but also by the availability of alternative spectator sports events, forms of entertainment and changing consumer preferences.

Our Street Races Depend On City Permits And Good Relationships With City Officials And Others

In order to conduct the Grand Prix of Long Beach, we must obtain an annual permit from the City of Long Beach to hold the race on city streets. Although Grand Prix has operated a racing event on the streets of Long Beach for twenty-eight years, there can be no assurance that this event will continue to be held or be successful. Similarly, the Grand Prix of Denver and the Grand Prix of St. Petersburg require that we obtain a variety of licenses and permits. Our agreements with the cities of Denver and St. Petersburg extend through 2008 and 2007, respectively. Our ability to conduct street races requires that we maintain excellent relationships with the host city and its officials. Furthermore, a portion of the Grand Prix of Denver is run on property leased to us by the Pepsi Center. Therefore, we must maintain an excellent relationship with management of the Pepsi Center.

Grand Prix’s Ability To Meet Payment Obligations Under A Loan Agreement With An Illinois Government Agency Depends On Revenues From Gateway

In order to finance the redevelopment of Gateway International Raceway, Grand Prix entered into a loan agreement with the Southwest Illinois Development Authority, which agreed to fund a loan to Grand Prix by issuing municipal bonds in the aggregate principal amount of $21,500,000. The bonds are unconditionally guaranteed by Grand Prix. Grand Prix issued a 20-year $21,500,000 promissory note to SWIDA which bears interest at an effective rate of approximately 8.91% per annum. Payments on the SWIDA loan are intended to be made primarily from the revenues from the operations of Gateway. Although Grand Prix is current on its obligation and expects to meet its future debt payment obligations out of the revenues from Gateway, and although Grand Prix will receive certain assistance from the City of Madison, Illinois in the form of a tax increment finance fund which should assist it in meeting its debt burdens, there can be no assurance that earnings from the future operations of Gateway will be sufficient to meet Grand Prix’s debt service obligations. A default under the SWIDA loan could have a material adverse effect on our business, financial condition and results of operations.

The Sales Tax And Property Tax Revenues To Service The Revenue Bonds For Infrastructure Improvements At Nashville May Be Inadequate

In September 1999, the Sports Authority of Wilson County, Tennessee issued $25,900,000 in revenue bonds, of which $25,500,000 is outstanding on December 31, 2002, to build local infrastructure improvements which benefit the operation of Nashville Superspeedway. Interest only payments were required until September 1, 2002 and were made from a capitalized interest fund established from bond proceeds. The capitalized interest fund was depleted in September 2002, at which time the debt service on the bonds became payable solely from sales taxes and incremental property taxes generated from the facility. As of December 31, 2002, $1,145,000 was available in the sales and incremental property tax fund maintained by Wilson County to pay the remaining principal and interest due under the bonds. During 2002, $1,222,000 was paid by the Company into the sales and incremental property tax fund and $785,000 was deducted from the fund for debt and interest service. In 2003, we expect the payments into the fund to exceed the debt and interest service. In the event the taxes are insufficient to cover the payment of principal and interest on the bonds, payments will be made under a $25,919,000 irrevocable direct-pay letter of credit issued by several banks pursuant to a reimbursement and security agreement under which we have agreed to reimburse the banks for drawings made under the letter of credit. Such an event could have a material adverse effect on our business, financial condition and results of operations.

The Seasonality Of Our Motorsports Events Increases The Variability Of Quarterly Earnings

Our business has been, and is expected to remain, seasonal given that it depends on our outdoor events for a substantial portion of revenues. We derive a substantial portion of our motorsports revenues from admissions and event-related revenue attributable to six NASCAR-sanctioned events at Dover, Delaware which are currently held in June and September. This has been offset to some degree by our other motorsports events, but quarterly earnings will vary.

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Index to Financial Statements

Our Insurance May Not Be Adequate To Cover Catastrophic Incidents

We maintain insurance policies that provide coverage within limits that are sufficient, in the opinion of management, to protect us from material financial loss incurred in the ordinary course of business. We also purchase special event insurance for motorsports events to protect against race-related liability. However, there can be no assurance that this insurance will be adequate at all times and in all circumstances. If we are held liable for damages beyond the scope of our insurance coverage, including punitive damages, our business, financial condition and results of operations could be materially and adversely affected.

Bad Weather Can Have An Adverse Financial Impact On Our Motorsports Events

We sponsor and promote outdoor motorsports events. Weather conditions affect sales of tickets, concessions and souvenirs, among other things at these events. Although we sell many tickets well in advance of the outdoor events and these tickets are issued on a non-refundable basis, poor weather conditions may adversely affect additional ticket sales, and concessions and souvenir sales, which could have an adverse effect on our business, financial condition and results of operations.

We do not currently maintain weather-related insurance for major events. Due to the importance of clear visibility and safe driving conditions to motorsports racing events, outdoor racing events may be significantly affected by weather patterns and seasonal weather changes. Any unanticipated weather changes could impact our ability to stage events. This could have a material adverse effect on our business, financial condition and results of operations.

Postponement And/Or Cancellation Of Major Motorsports Events Could Adversely Affect Us

If one of our events is postponed because of weather or other reasons such as, for example, the general postponement of all major sporting events in this country following the September 11, 2001, terrorism attacks, we could incur increased expenses associated with conducting the rescheduled event, as well as possible decreased revenues from tickets, food, drinks and merchandise at the rescheduled event. If such an event is cancelled, we could incur the expenses associated with preparing to conduct the event as well as losing the revenues, including live broadcast revenues associated with the event.

If a cancelled event is part of the NASCAR Winston Cup Series or NASCAR Busch Series, we could experience a reduction in the amount of money received from television revenues for all of our NASCAR-sanctioned events in the series that experienced the cancellation. This would occur if, as a result of the cancellation, and without regard to whether the cancelled event was scheduled for one of our facilities, NASCAR experienced a reduction in television revenues greater than the amount scheduled to be paid to the promoter of the cancelled event.

Our Goodwill May Become Further Impaired In The Future And Require A Write Down To Comply With Accounting Standards

In June 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible Assets. Statement No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of Statement No. 142. We adopted the provisions of Statement No. 142 effective January 1, 2002 and as a result recorded a non-cash charge of $28,606,000 associated with the goodwill of Grand Prix as a cumulative effect of accounting change in 2002. Even after this charge, approximately $21,883,000, or 7.6%, of our total assets as of December 31, 2002, consists of goodwill. If in the future the application of the test for impairment of goodwill results in a reduction in the carrying value of the goodwill, we will be required to record the amount of the reduction in goodwill as a non-cash charge against operating earnings which would also reduce our stockholders’ equity.

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Index to Financial Statements

Item 7A.    Quantitative And Qualitative Disclosure About Market Risk

The carrying values of DVD’s long-term debt approximates its fair value at December 31, 2002 and 2001. DVD is exposed to market risks related to fluctuations in interest rates for its variable rate borrowings of $51,515,000 at December 31, 2002 under its revolving credit facility. A change in interest rates of one percent on the balance outstanding at December 31, 2002 would cause a change in total annual interest costs of $515,000.

In September 1999, the Sports Authority of the County of Wilson, Tennessee issued its Variable Rate Tax Exempt Infrastructure Revenue Bonds, Series 1999, in the amount of $25,900,000. DVD is exposed to market risks related to fluctuations in interest rates for these bonds. A significant change in interest rates could result in the Company being responsible for debt service payments not covered by the capitalized interest fund or the sales and incremental property taxes generated from the facility.

Item 8.    Financial Statements And Supplementary Data

DVD’s consolidated financial statements and the Independent Auditors’ Report included in this report are shown on the Index to Consolidated Financial Statements on page 30.

Item 9.    Disagreements With Accountants On Accounting And Financial Disclosure

None.

Part III

Item 10.    Directors And Executive Officers Of The Registrant

Except as presented below, the information called for by this Item 10 is incorporated by reference to the DVD Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 23, 2003.

Executive Officers of the Registrant.    As of December 31, 2002, the executive officers of the registrant were:

The Company’s Chairman of the Board, Henry B. Tippie, is a non-employee director and, therefore, not an executive officer of the Company. Mr. Tippie has served DVD in that capacity, or as Vice Chairman of the Board, for over 5 years. Mr. Tippie also serves as Chairman of the Board to Gaming as a non-employee director.

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Index to Financial Statements

Denis McGlynn has served as the Company’s President and Chief Executive Officer for 23 years. Mr. McGlynn also serves as President and Chief Executive Officer to Gaming.

Jerome Miraglia joined DVD as Executive Vice President in January 2002. Prior to joining the Company, Mr. Miraglia was the Executive Vice President of Mariah Vision 3, Inc. From 1984 to 1996, Mr. Miraglia was a partner in the law firm of Miles & Stockbridge in Baltimore, MD.

Partrick J. Bagley joined DVD as Vice President-Finance and Chief Financial Officer in May 2002. Prior to joining the Company, Mr. Bagley was the Vice President-Finance, Treasurer and CFO of Rollins Truck Leasing Corp. Mr. Bagley has been a director of the Company since 1996 and prior to that had provided consulting services since 1994.

Klaus M. Belohoubek has been Vice President-General Counsel and Secretary since 1999 and has provided legal representation to the Company in various capacities since 1990. Mr. Belohoubek also serves as Senior Vice President-General Counsel and Secretary of Gaming and previously served as Vice President-General Counsel and Secretary to Rollins Truck Leasing Corp.

Thomas Wintermantel joined DVD as Treasurer and Assistant Secretary in July 2002. For more than five years prior to joining the Company, Mr. Wintermantel was the Financial Vice President and Treasurer of John W. Rollins & Associates, Financial Vice President of Rollins Jamaica, Ltd. and President and Director of the John W. Rollins Foundation.

Item 11.    Executive Compensation

The information called for by this Item 11 is incorporated by reference to the DVD Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 23, 2003.

Item 12.    Security Ownership Of Certain Beneficial Owners And Management

The information called for by this Item 12 is incorporated by reference to the DVD Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 23, 2003.

Item 13.    Certain Relationships and Related Transactions

The information called for by this Item 13 is incorporated by reference to the DVD Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 23, 2003.

Item 14.    Controls and Procedures

Dover Motorsports, Inc.’s Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures (as defined in applicable federal securities law) within 90 days of the filing of this annual report, and they concluded that these controls and procedures are effective.

There are no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their most recent evaluation.

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Index to Financial Statements

Item 15.    Exhibits, Financial Statement Schedules And Reports On Form 8-K

(a)(1) Financial Statements – See accompanying Index to Consolidated Financial Statements on page 30.

25

Index to Financial Statements

No reports on Form 8-K were filed with the SEC during the fourth quarter of the fiscal year covered by this report.

26

Index to Financial Statements

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

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Index to Financial Statements

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Denis McGlynn, certify that:

Date: March 13, 2003

/s/ Denis McGlynn

Denis McGlynn

President and Chief Executive

Officer and Director

28

Index to Financial Statements

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Patrick J. Bagley, certify that:

Date: March 13, 2003

/s/ Patrick J. Bagley

Patrick J. Bagley

Sr. Vice President-Finance and

Chief Financial Officer

29

Index to Financial Statements

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

30

Index to Financial Statements

INDEPENDENT AUDITORS’ REPORT

The Stockholders and Board of Directors,

    Dover Motorsports, Inc.:

We have audited the accompanying consolidated balance sheet of Dover Motorsports, Inc. and subsidiaries (the Company), as of December 31, 2002 and 2001, and the related consolidated statements of earnings and comprehensive earnings and cash flows for the years ended December 31, 2002 and 2001, the six-months ended December 31, 2000 and the year ended June 30, 2000. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dover Motorsports, Inc. and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for the years ended December 31, 2002 and 2001, the six-months ended December 31, 2000 and the year ended June 30, 2000, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 3 to the consolidated financial statements, effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”

KPMG LLP

Philadelphia, Pennsylvania

January 29, 2003

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Index to Financial Statements

DOVER MOTORSPORTS, INC.

CONSOLIDATED STATEMENT OF EARNINGS

    AND COMPREHENSIVE EARNINGS

The Notes to the Consolidated Financial Statements are an integral part of these consolidated statements.

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Index to Financial Statements

DOVER MOTORSPORTS, INC.

CONSOLIDATED BALANCE SHEET