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What changed in Churchill Downs Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Churchill Downs Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+265 added−282 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in Churchill Downs Inc's 2023 10-K

265 paragraphs added · 282 removed · 200 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

77 edited+18 added−21 removed54 unchanged
Biggest changeThe following table summarizes key information regarding our gaming properties: State Property Acres Casino Space (Sq. ft.) Slots and Video Lottery Terminals Table Games Hotel Rooms Retail Sportsbook Wholly-owned Florida Calder Casino 54 106,000 1,090 6 N/A N/A Iowa Hard Rock Hotel and Casino Sioux City 15 41,000 660 20 54 ü Louisiana Fair Grounds Race Course and Slots and Video Services LLC 145 33,000 1,620 — N/A ü Maine Oxford Casino and Hotel 97 27,000 960 28 100 N/A Maryland Ocean Downs Casino and Racetrack 167 70,000 850 18 N/A ü Mississippi Harlow's Casino Resort and Spa 85 33,000 670 18 105 ü Mississippi Riverwalk Casino Hotel 22 25,000 600 11 80 ü New York del Lago Resort and Casino 83 94,000 1,670 76 205 ü Pennsylvania Presque Isle Downs and Casino 270 153,000 1,550 35 N/A ü Pennsylvania Lady Luck Casino Nemacolin — 25,000 600 26 N/A N/A Equity Investments Illinois Rivers Casino Des Plaines 21 140,000 1,510 120 N/A ü Ohio Miami Valley Gaming and Racing 120 190,000 2,200 — N/A ü Total 937,000 13,980 358 544 7 Wholly-owned gaming properties Florida Calder Casino ("Calder") in Miami Gardens, Florida is located near Hard Rock Stadium, home of the Miami Dolphins.
Biggest changeThe Gaming segment generates revenue and expenses from slot machines, table games, video lottery terminals ("VLTs"), video poker, HRMs, ancillary food and beverage services, hotel services, commission on pari-mutuel wagering, racing event-related services, and other miscellaneous operations. 7 The following table summarizes key information regarding our current and planned gaming properties: State Property Acres Casino Space (Sq. ft.) Slots and Video Lottery Terminals (a) Table Games Hotel Rooms Retail Sports Book (b) Wholly owned Florida Calder Casino 54 106,000 1,080 6 N/A N/A Indiana Terre Haute Casino Resort (c) 48 36,000 1,000 34 122 ü Iowa Hard Rock Hotel and Casino Sioux City 15 41,000 660 20 54 ü Louisiana Fair Grounds Race Course and Slots and Video Services LLC 145 33,000 2,030 N/A N/A ü Maine Oxford Casino and Hotel 97 27,000 970 24 107 N/A Maryland Ocean Downs Casino and Racetrack 167 70,000 880 18 N/A ü Mississippi Harlow's Casino Resort and Spa 85 33,000 670 20 105 ü Mississippi Riverwalk Casino Hotel 22 25,000 590 11 76 ü New York del Lago Resort and Casino 83 99,000 1,670 80 205 ü Pennsylvania Presque Isle Downs and Casino 270 61,000 1,540 34 N/A ü Equity Investments Illinois Rivers Casino Des Plaines 21 78,000 1,520 120 N/A ü Ohio Miami Valley Gaming and Racing 120 190,000 2,200 N/A N/A ü Total 799,000 14,810 367 669 (a) Includes HRMs and video poker machines at Fair Grounds Race Course and Slots and Video Services LLC.
Gaming laws require industry participants to: • Ensure that unsuitable individuals and organizations have no role in gaming operations, • Establish procedures designed to prevent cheating and fraudulent practices, • Establish and maintain responsible accounting practices and procedures, • Maintain effective controls over financial practices, including establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenue, 11 • Maintain systems for reliable record keeping, • File periodic reports with gaming regulators, • Ensure that contracts and financial transactions are commercially reasonable, reflect fair market value and are arms-length transactions, • Establish programs to promote responsible gambling and inform patrons of the availability of help for problem gambling, and • Enforce minimum age requirements.
Gaming laws require industry participants to: • Ensure that unsuitable individuals and organizations have no role in gaming operations, • Establish procedures designed to prevent cheating and fraudulent practices, • Establish and maintain responsible accounting practices and procedures, • Maintain effective controls over financial practices, including establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenue, • Maintain systems for reliable record keeping, • File periodic reports with gaming regulators, • Ensure that contracts and financial transactions are commercially reasonable, reflect fair market value and are arms-length transactions, • Establish programs to promote responsible gambling and inform patrons of the availability of help for problem gambling, and • Enforce minimum age requirements.
The Company also provides donations to non-profit organizations that support these initiatives within our communities. Talent Acquisition, Development and Retention We invest in attracting, developing, and retaining our team members. Our philosophy is to communicate a clear purpose and strategy, set challenging goals, drive accountability, continuously assess, develop, and advance talent, and to embrace a leadership-driven talent strategy.
The Company also provides donations to non-profit organizations that support these initiatives within our communities. 10 Talent Acquisition, Development and Retention We invest in attracting, developing, and retaining our team members. Our philosophy is to communicate a clear purpose and strategy, set challenging goals, drive accountability, continuously assess, develop, and advance talent, and to embrace a leadership-driven talent strategy.
Under certain of these laws and regulations, a current or previous owner or operator of property may be liable for the costs of remediating hazardous substances or petroleum products on its property, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time the contamination occurred.
Under certain of these laws and regulations, a current or previous owner or operator of property may be 14 liable for the costs of remediating hazardous substances or petroleum products on its property, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time the contamination occurred.
License fees and taxes are based upon such factors as a percentage of 13 the gaming revenue received; the number of gambling devices and table games operated; or a one-time fee payable upon the initial receipt of license and fees in connection with the renewal of license.
License fees and taxes are based upon such factors as a percentage of the gaming revenue received; the number of gambling devices and table games operated; or a one-time fee payable upon the initial receipt of license and fees in connection with the renewal of license.
Under the IHA, racetracks and ADWs can accept interstate off-track wagers if the racetracks and ADWs have approvals from (1) the host horse racetrack including a written agreement 10 with the horsemen’s group, if applicable, (2) the host racing commission, and (3) the off-track racing commission.
Under the IHA, racetracks and ADWs can accept interstate off-track wagers if the racetracks and ADWs have approvals from (1) the host horse racetrack including a written agreement with the horsemen’s group, if applicable, (2) the host racing commission, and (3) the off-track racing commission.
Under these arrangements, we typically provide an ADW platform and related operational services while the third party typically provides the brand, marketing, and limited customer functions. 6 We announced two of these business-to-business agreements in 2022.
Under these arrangements, we typically provide an ADW platform and related operational services while the third party typically provides the brand, marketing, and limited customer functions. We announced two of these business-to-business agreements in 2022.
Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and other Securities and Exchange Commission ("SEC") filings, and any amendments to those reports and any other filings that we file with or furnish to the SEC under the Securities Exchange Act of 1934 are made available free of charge on our website ( www.churchilldownsincorporated.com ) as soon as reasonably practicable after we electronically file the materials with the SEC and are also available at the SEC’s website at www.sec.gov . 14
Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and other Securities and Exchange Commission ("SEC") filings, and any amendments to those reports and any other filings that we file with or furnish to the SEC under the Securities Exchange Act of 1934 are made available free of charge on our website ( www.churchilldownsincorporated.com ) as soon as reasonably practicable after we electronically file the materials with the SEC and are also available at the SEC’s website at www.sec.gov . 15
Live and Historical Racing The Live and Historical Racing segment includes live and historical pari-mutuel racing related revenue and expenses at Churchill Downs Racetrack and our historical racing properties in Kentucky, Virginia, and New Hampshire.
Live and Historical Racing The Live and Historical Racing segment primarily includes live and historical pari-mutuel racing related revenue and expenses at Churchill Downs Racetrack and our historical racing properties in Kentucky, Virginia, and New Hampshire.
The demographic profile of our guests, global television viewership and long-running nature of this iconic event are attractive to sponsors and corporate partners, especially those with luxury and/or marquee brands. We conducted 65 live race days in 2020, 71 live race days in 2021 and 76 live race days in 2022.
The demographic profile of our guests, global television viewership, and long-running nature of this iconic event are attractive to sponsors and corporate partners, especially those with luxury and/or marquee brands. We conducted 71 live race days in 2021 and 76 live race days in 2022.
On September 8, 2022, we announced a multi-year agreement to enable FanDuel, a sportsbook and mobile betting operator, to create a fully integrated and seamless wagering experience with a single wallet for horse racing and sports with exclusive TV rights to racing content and non-exclusive Kentucky Derby sponsorship rights for sports wagering.
On September 8, 2022, we announced a multi-year agreement to enable FanDuel, a sports book and mobile betting operator, to create a fully integrated and seamless wagering experience with a single wallet for horse racing and sports with exclusive TV rights to racing content and non-exclusive Kentucky Derby sponsorship rights for sports wagering.
Our Live and Historical Racing properties earn commissions primarily from pari-mutuel wagering on live and historical races, simulcast fees earned from other wagering sites, fees from racing event-related services including admissions, personal seat licenses, sponsorships, television rights, and other miscellaneous services, and revenue from food and beverage services.
Our Live and Historical Racing properties earn commissions from pari-mutuel wagering on live and historical races, simulcast fees earned from other wagering sites, fees from racing event-related services including admissions, personal seat licenses, sponsorships, television rights, and other miscellaneous services, hotel services, and revenue from food and beverage services.
On October 25, 2022, a number of individual plaintiffs associated with video poker and truckstops, filed a lawsuit in the 19th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including Fair Grounds, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum.
On October 25, 2022, a number of individual plaintiffs associated with video poker and truckstops, filed a lawsuit in the 19 th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including Fair Grounds, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum.
TwinSpires Regulations and Potential Legislative Changes TwinSpires is licensed in Oregon under a multi-jurisdictional simulcasting and interactive wagering totalisator hub license issued by the Oregon Racing Commission in accordance with Oregon law and the IHA. We also hold advance deposit wagering licenses in certain other states where appropriate.
TwinSpires Regulations and Potential Legislative Changes TwinSpires is licensed in Oregon under a multi-jurisdictional simulcasting and interactive wagering totalisator hub license issued by the Oregon Racing Commission in accordance with Oregon law and the IHA. We also hold ADW licenses in certain other states where appropriate.
Horse Racing TwinSpires Horse Racing operates the online horse racing wagering business for TwinSpires.com, BetAmerica.com, and other white-label platforms; facilitates high dollar wagering by certain customers; and provides the Bloodstock Research Information Services platform for horse racing statistical data. TwinSpires is one of the largest and most profitable legal online horse racing wagering platforms in the U.S.
TwinSpires is headquartered in Louisville, Kentucky. ADW TwinSpires operates the online horse racing wagering business for TwinSpires.com, BetAmerica.com, and other white-label platforms; facilitates high dollar wagering by certain customers; and provides the Bloodstock Research Information Services platform for horse racing statistical data. TwinSpires is one of the largest and most profitable legal online horse racing wagering platforms in the U.S.
As of December 31, 2022, the Company had approximately 340 HRMs in OTBs in Louisiana. If the 2021 HHR Act is determined to be unconstitutional it could have an adverse impact on our Louisiana HRM results which are reported in our Gaming segment.
As of 11 December 31, 2023, the Company had approximately 500 HRMs in OTBs in Louisiana. If the 2021 HHR Act is determined to be unconstitutional it could have an adverse impact on our Louisiana HRM results which are reported in our Gaming segment.
The Paddock Project will create a larger paddock walking ring for viewing the horses prior to the races, a new Paddock Club in the area on the first floor under the Twin Spires that will provide views of the paddock and views of the tunnel that the horses walk through, new hospitality and other amenities for guests in certain areas of the third floor clubhouse seats, and new terraces overlooking the paddock.
The Paddock Project will improve the flow of guests throughout the paddock, create a larger paddock walking ring for viewing the horses prior to the races, create two new clubs in the area on the first floor under the Twin Spires that will provide views of the paddock and views of the tunnel that the horses walk through, new hospitality and other amenities for guests in certain areas of the third-floor clubhouse seats, and new terraces overlooking the paddock.
Gaming authorities in the various jurisdictions in which we operate: • Adopt rules and regulations under the implementing statutes, • Interpret and enforce gaming laws, • Impose disciplinary sanctions for violations, including fines and penalties, • Review the character and fitness of participants in gaming operations and make determinations regarding suitability or qualification for licensure, • Grant licenses for participation in gaming operations, • Collect and review reports and information submitted by participants in gaming operations, • Review and approve transactions, such as acquisitions or change-of-control transactions of gaming industry participants, securities offerings and debt transactions engaged in by such participants, and • Establish and collect fees and taxes.
Gaming authorities in the various jurisdictions in which we operate: • Adopt rules and regulations under the implementing statutes, • Interpret and enforce gaming laws, • Impose disciplinary sanctions for violations, including fines and penalties, • Review the character and fitness of participants in gaming operations and make determinations regarding suitability or qualification for licensure, • Grant licenses for participation in gaming operations, • Collect and review reports and information submitted by participants in gaming operations, • Review and approve transactions, such as acquisitions or change-of-control transactions of gaming industry participants, securities offerings, and debt transactions engaged in by such participants, and • Establish and collect fees and taxes. 12 Any change in the gaming laws or regulations of a jurisdiction could have a material adverse impact on our gaming operations.
Churchill Downs Racetrack Churchill Downs Racetrack is in Louisville, Kentucky and is an internationally known thoroughbred racing operation best known as the home of our iconic flagship event, the Kentucky Derby. We have conducted thoroughbred racing continuously at Churchill Downs Racetrack since 1875.
Churchill Downs Racetrack Churchill Downs Racetrack is in Louisville, Kentucky and is an internationally known thoroughbred racing operation best known as the home of our iconic flagship event, the Kentucky Derby. Thoroughbred racing has been conducted at Churchill Downs Racetrack since 1875.
Virginia The Company acquired Colonial Downs Racetrack ("Colonial Downs") and six historical racing entertainment venues in Virginia as part of the acquisition of substantially all of the ass ets of Peninsula Pacific Entertainment LLC ("P2E") on November 1, 2022 ("P2E Transaction").
Virginia The Company acquired Colonial Downs Racetrack ("Colonial Downs") and six historical racing entertainment venues across Virginia as part of the acquisition of substantially all of the assets of Peninsula Pacific Entertainment LLC ("P2E") on November 1, 2022 ("P2E Transaction").
Calder offers two dining facilities and an entertainment venue. On June 17, 2022, the Company closed on the sale of 115.7 acres of land near Calder for $291.0 million, or approximately $2.5 million per acre, to Link Logistics Real Estate, a Blackstone portfolio company. The Company may sell 15-20 acres of this land in the future for retail development.
Calder offers two dining facilities and an entertainment venue. On June 17, 2022, the Company closed on the sale of 115.7 acres of land near Calder for $291.0 million, or approximately $2.5 million per acre, to Link Logistics Real Estate, a Blackstone portfolio company. The Company still owns 15-20 acres that may be sold for future development.
We can reacquire the facility at any time for $1.00 subject to the terms of the lease. 4 In July 2021, we announced three major multi-year capital investments to transform key areas of Churchill Downs Racetrack: The Homestretch Club, the First Turn Experience, and the Paddock Project.
We can reacquire the facility at any time for $1.00 subject to the terms of the lease. In July 2021, we announced three major multi-year capital investments to transform key areas of Churchill Downs Racetrack: the Homestretch Club, the First Turn Experience, and the Paddock Project. The Homestretch Club opened for the 148 th Kentucky Derby in May 2022.
A supervisor or conservator can be appointed by gaming authorities to operate our gaming properties, or in some jurisdictions, take title to our gaming assets in the jurisdiction, and under certain circumstances, income generated during such appointment could be forfeited to the applicable state or states. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions.
A supervisor or conservator can be appointed by gaming authorities to operate our gaming properties, or in some jurisdictions, take title to our gaming assets in the 13 jurisdiction, and under certain circumstances, income generated during such appointment could be forfeited to the applicable state or states.
BetAmerica.com is an online wagering business licensed under TwinSpires that offers wagering on horse racing throughout the U.S. We also provide technology services to third parties, and we earn commissions from white label ADW products and services.
This business also offers customers streaming video of live horse races, replays, and an assortment of racing and handicapping information. BetAmerica.com is an online wagering business 6 licensed under TwinSpires that offers wagering on horse racing throughout the U.S. We also provide technology services to third parties, and we earn commissions from white label ADW products and services.
On November 29, 2022, the Company announced a multi-year agreement to provide DraftKings ADW technology and other services. Sports and Casino Our TwinSpires Sports and Casino business includes the results of our retail sportsbooks at our wholly-owned gaming properties and through third parties in Michigan and Arizona.
On November 29, 2022, the Company announced a multi-year agreement to provide DraftKings ADW technology and other services. Both agreements began in early 2023. Sports Betting Our TwinSpires sports betting business includes the results of our retail sports books at our wholly owned properties and online sports betting through third parties.
As a result, violations by us of applicable gaming laws could have a material adverse impact on our gaming operations. Some jurisdictions prohibit certain types of political activity by a gaming licensee, officers, directors and key employees. A violation of such a prohibition may subject the offender to criminal and/or disciplinary action.
Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. As a result, violations by us of applicable gaming laws could have a material adverse impact on our gaming operations. Some jurisdictions prohibit certain types of political activity by a gaming licensee, officers, directors, and key employees.
The new premium reserved seats include 2,550 stadium club seats, 66 covered terraced dining tables for up to 440 guests, 30 Trackside Lounges for up to 200 guests offering a "courtside seat" experience, five private 60-person VIP Hospitality Lounges as upgrades and an 18,600 square-foot indoor hospitality space with a grand staircase and 95-foot feature bar.
The Homestretch Club project has 3,250 premium reserved seats which include 2,550 stadium club seats, 66 covered terraced dining tables, 30 Trackside Lounges offering a "courtside seat" experience, five private VIP hospitality lounges, and an 18,600 square-foot indoor hospitality space with a grand staircase and 95-foot feature bar.
Rivers Des Plaines is a gaming entertainment venue located on 21 acres and has seven dining and entertainment facilities, and an approximate 5,000 square-foot state-of-the-art BetRivers Sports Bar. During 2022, Rivers Des Plaines completed a 78,000 square-foot expansion between the existing casino building and the recently enlarged parking garage.
Rivers Des Plaines is a gaming entertainment venue located on 21 acres and has seven dining facilities, and an approximate 5,000 square-foot state-of-the-art BetRivers Sports Bar.
In 2023, we anticipate conducting up to 79 live race days. Churchill Downs Racetrack is located on 175 acres and has a one-mile dirt track, a 7/8-mile turf track, a stabling area, and a variety of areas, structures, and buildings that provide reserved seating for approximately 59,000 of our patrons.
Churchill Downs Racetrack is located on 175 acres and has a one-mile dirt track, a 7/8-mile turf track, a stabling area, and a variety of areas, structures, and buildings that provide reserved seating for our patrons.
We also compete with daily fantasy sports gaming companies that are expanding into mobile and online sports betting and iGaming, international sports betting businesses looking to expand into the U.S. market, and other forms of legal and illegal sports betting and iGaming operations. 9 Gaming Our Gaming properties operate in highly competitive environments and primarily compete for customers with other casinos in the surrounding regional gaming markets.
We also compete with daily fantasy sports gaming companies that are expanding into mobile and online sports betting and iGaming, international sports betting businesses looking to expand into the U.S. market, and other forms of legal and illegal sports betting and iGaming operations.
Qualification and suitability determinations require submission of detailed personal and financial information followed by a thorough investigation. Changes in licensed positions must be reported to gaming authorities.
Qualification and suitability determinations require submission of detailed personal and financial information followed by a thorough investigation. Changes in licensed positions must be reported to gaming authorities. Gaming authorities have the ability to deny a license, qualification, or finding of suitability and have jurisdiction to disapprove a change in a corporate position.
Southwestern Kentucky Oak Grove Racing & Gaming ("Oak Grove") is a premier state-of-the-art live harness racing and HRM venue located on 240 acres approximately one-hour north of Nashville, Tennessee in Oak Grove, Kentucky. Oak Grove owns and operates a 5/8-mile harness racing track.
Southwestern Kentucky Oak Grove Racing & Gaming ("Oak Grove") is a premier state-of-the-art live harness racing and HRM venue located on 240 acres approximately one-hour north of Nashville, Tennessee in Oak Grove, Kentucky. Oak Grove owns and operates a harness racing track, 128-room hotel, and simulcast and HRM facility with an event center and food and beverage venues.
Gaming authorities have the ability to deny a license, qualification or finding of suitability and have jurisdiction to disapprove a change in a corporate position. 12 If one or more gaming authorities were to find that an officer, director or key employee fails to qualify or is unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required to sever all relationships with such person.
If one or more gaming authorities were to find that an officer, director, or key employee fails to qualify or is unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required to sever all relationships with such person.
Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business and the operation and development of regional casino gaming properties. Business Segments The Company manages its business through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming.
Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties.
Reporting and Record-keeping Requirements We are required periodically to submit detailed financial and operating reports and furnish any other information that gaming authorities may require.
A violation of such a prohibition may subject the offender to criminal and/or disciplinary action. Reporting and Record-keeping Requirements We are required periodically to submit detailed financial and operating reports and furnish any other information that gaming authorities may require.
As a racetrack operator, we compete for horses with other racetracks running live racing meets at or near the same time as our races. Our ability to compete is substantially dependent on the racing calendar, number of horses racing and purse sizes.
Our ability to compete is substantially dependent on the racing calendar, number of horses racing, and purse sizes. As a content provider, we compete for wagering dollars in the simulcast market with other racetracks conducting races at or near the same times as our races.
United Tote United Tote manufactures and operates pari-mutuel wagering systems for racetracks, OTBs and other pari-mutuel wagering businesses. United Tote provides totalisator services which accumulate wagers, calculate payoffs and displays wagering data to patrons who wager on horse races.
United Tote provides totalisator services which accumulate wagers, calculate payoffs, and displays wagering data to patrons who wager on horse races. United Tote has contracts to provide totalisator services to several third-party racetracks, OTBs, and other pari-mutuel wagering businesses and provides these services at our facilities.
Thirty-three states have authorized sports betting and thirty of these states have sports betting operational as of December 31, 2022. Each state has different structures for the number of allowable industry participants, license fees, taxes, and other operational requirements.
Sports betting has been authorized and is operational in thirty-eight states and the District of Columbia as of December 31, 2023. Each state has different structures for the number of allowable industry participants, license fees, taxes, and other operational requirements. As of December 31, 2023, the Company is operational in nine states for retail sports betting.
Terre Haute will be a gaming entertainment venue featuring 400,000 square-feet space with 1,000 slot machines, 34 table games, a 122-room luxury hotel, a retail sportsbook, and several food and beverage offerings. Terre Haute is scheduled to be completed in early 2024.
Indiana The Company is investing up to $290.0 million in the development of the Terre Haute Casino Resort ("Terre Haute") in Terre Haute, Indiana. Terre Haute will be a gaming entertainment venue featuring 400,000 square-feet space with 1,000 slot machines, 34 table games, a 122-room luxury hotel, and several food and beverage offerings.
Licenses typically require a determination that the applicant qualifies or is suitable to hold the license. Gaming authorities have very broad discretion in determining whether an applicant qualifies for licensing or should be deemed suitable.
Gaming authorities have very broad discretion in determining whether an applicant qualifies for licensing or should be deemed suitable.
The new Paddock Project is scheduled for completion for the 150 th Kentucky Derby in May 2024.
The Jockey Club renovation is scheduled for completion in time for the 150 th Kentucky Derby in May 2024.
Any change in the gaming laws or regulations of a jurisdiction could have a material adverse impact on our gaming operations. Licensing and Suitability Determinations Gaming laws require us, each of our subsidiaries engaged in gaming operations, certain of our directors, officers and employees, and in some cases, certain of our shareholders, to obtain licenses from gaming authorities.
Licensing and Suitability Determinations Gaming laws require us, each of our subsidiaries engaged in gaming operations, certain of our directors, officers and employees, and in some cases, certain of our shareholders, to obtain licenses from gaming authorities. Licenses typically require a determination that the applicant qualifies or is suitable to hold the license.
The new entertainment venue will provide an HRM gaming area, a main-level sports bar with a stage for music and live entertainment, a premium bourbon library, and an elegant wine and charcuterie lounge for guests, including locals, tourists, and convention attendees.
DCG Downtown has a gaming area with approximately 500 HRMs, a main-level 5 sports bar with a stage for live entertainment, a premium bourbon bar, and an elegant wine lounge for guests, including locals, tourists, and convention attendees.
Louisiana Fair Grounds Race Course & Slots ("Fair Grounds") is a gaming facility and race course with a bar, a simulcast facility, a one-mile dirt track, a 7/8-mile turf track, a grandstand, and a stabling area. Fair Grounds conducts approximately 80 live racing days each year.
Louisiana Fair Grounds Race Course & Slots ("Fair Grounds") is a gaming facility and racecourse with a bar, a simulcast facility, a dirt and turf track, and a stabling area. Fair Grounds conducts approximately 80 live racing days each year. The facility includes clubhouse and grandstand seating for approximately 5,000 guests, a general admissions area, and several dining facilities.
As of December 31, 2022, the Company is operational in nine states for retail sports betting, two states for online sports betting, and one state for iGaming. Gaming Regulations and Potential Legislative Changes The gaming industry is a highly regulated industry. In the U.S., gaming laws are generally designed to protect consumers and the viability and integrity of the industry.
Gaming Regulations and Potential Legislative Changes The gaming industry is a highly regulated industry. In the U.S., gaming laws are generally designed to protect consumers and the viability and integrity of the industry.
Changes in Kentucky laws or regulations may limit or otherwise materially affect the types of HRMs that may be conducted and such changes, if enacted, could have an adverse impact on our Kentucky HRM operations. Louisiana In Louisiana, the 2021 Historical Horse Racing Act ("2021 HHR Act") allows OTBs to have up to 50 HRMs.
Changes in Kentucky laws or regulations may limit or otherwise materially affect the types of HRMs that may be conducted and such changes, if enacted, could have an adverse impact on our Kentucky HRM operations. In 2023, the Kentucky General Assembly passed a bill to authorize the KHRC to regulate sports betting.
Kentucky Louisville The Company owns Derby City Gaming which is a state-of-the-art HRM facility that was opened in September 2018 at the Churchill Downs Racetrack auxiliary training facility. Derby City Gaming operates under the Churchill Downs Racetrack pari-mutuel racing license and has a simulcast center and a dining facility.
Kentucky Louisville Derby City Gaming & Hotel ("Derby City Gaming") is a state-of-the-art HRM facility located at the Churchill Downs Racetrack auxiliary training facility and has a simulcast center and a dining facility.
New York As part of the P2E Transaction, the Company acquired del Lago Resort and Casino ("del Lago") in Waterloo, New York, which is a gaming facility and a hotel. Pennsylvania Presque Isle Downs and Casino ("Presque Isle") is a gaming facility with a racetrack that conducts 90 live thoroughbred racing days each year.
New York As part of the P2E Transaction, the Company acquired del Lago Resort and Casino in Waterloo, New York, which is a gaming facility and a hotel with several dining options.
TwinSpires accepts pari-mutuel wagers through advance deposit wagering ("ADW") from customers residing in certain states who establish and fund an account from which these customers may place wagers via telephone, mobile applications or through the Internet.
TwinSpires accepts pari-mutuel wagers through ADW from customers residing in certain states who establish and fund an account from which these customers may place wagers via telephone, mobile applications, or through the Internet. This business is licensed as a multi-jurisdictional simulcasting and interactive wagering hub in the state of Oregon and holds licenses from various other states where applicable.
Our HRM entertainment venues in Kentucky, Virginia, and New Hampshire compete with regional casinos in the area and other forms of legal and illegal gaming. TwinSpires Horse Racing Our TwinSpires Horse Racing business competes with other ADW businesses for both customers and racing content, as well as brick-and-mortar racetracks, casinos, OTBs, and other forms of legal and illegal sports betting.
TwinSpires ADW Our TwinSpires ADW business competes with other ADW businesses for both customers and racing content, as well as brick-and-mortar racetracks, casinos, OTBs, and other forms of legal and illegal sports betting. Sports Betting Our TwinSpires sports betting business competes for customers with retail, mobile, and online offerings from commercial brick-and-mortar casinos and racetracks.
On August 11, 2022, we entered into an agreement to sell 49% of United Tote, a wholly-owned subsidiary of the Company to NYRA Content Management Solutions, LLC, a subsidiary of the New York Racing Association ("NYRA"). NYRA is a not-for-profit corporation that operates the three largest thoroughbred horse racing tracks in the state of New York.
On August 11, 2022, the Company entered into an agreement to sell 49% of United Tote, a wholly owned subsidiary of the Company to NYRA Content Management Solutions, LLC, a subsidiary of the New York Racing Association. The Company has received a deposit on the pending transaction of $14.4 million.
As of December 31, 2022, approximately 770 full-time employees were covered by 19 collective bargaining agreements. We have experienced no material interruptions of operations due to disputes with our team members.
We have the highest level of seasonal team members during the second quarter when we traditionally run the Kentucky Derby. As of December 31, 2023, approximately 1,120 employees were covered by 12 collective bargaining agreements. We have experienced no material interruptions of operations due to disputes with our team members.
Maryland Ocean Downs Casino and Racetrack is a gaming facility with a racetrack that conducts approximately 40 live harness racing days each year. Mississippi Harlow’s Casino Resort and Spa is a gaming facility and hotel. Riverwalk Casino Hotel owns and operates a hotel and two dining facilities.
Maine Oxford Casino and Hotel, located in Oxford, Maine, is a gaming facility with a hotel and a dining facility. Maryland Ocean Downs Casino and Racetrack, located in Berlin, Maryland, is a gaming facility with several dining options and a racetrack that conducts approximately 45 live harness racing days each year.
Our Gaming properties compete to a lesser extent with state-sponsored lotteries, off-track wagering, card parlors, online gambling, and other forms of legalized gaming in the U.S. Human Capital We believe our human capital is material to our operations and core to the long-term success of our Company.
Gaming Our Gaming properties operate in highly competitive environments and primarily compete for customers with other casinos in the surrounding regional gaming markets. Our Gaming properties compete to a lesser extent with state-sponsored lotteries, off-track wagering, card parlors, online gambling, and other forms of legalized gaming in the U.S.
Historical Racing Properties The following table summarizes key information regarding our current historical racing properties: State Property City/ Location Floor Space (Sq. ft.) Historical Racing Machines ("HRMs") Kentucky Derby City Gaming Louisville, Kentucky 85,000 1,170 Kentucky Turfway Park Northern Kentucky 155,000 850 Kentucky Newport Northern Kentucky 23,000 500 Kentucky Oak Grove Southwestern Kentucky 180,000 1,360 Kentucky Ellis Park Western Kentucky 100,000 320 New Hampshire Chasers (a) Salem, New Hampshire 4,000 (a) Virginia Rosie's New Kent Central Virginia 127,000 550 Virginia Rosie's Richmond Central Virginia 54,000 700 Virginia Rosie's Hampton Southeast Virginia 38,000 700 Virginia Rosie's Vinton Southern Virginia 15,000 470 Virginia Rosie's Dumfries Northern Virginia 19,000 150 Virginia Rosie's Collinsville Southern Virginia 2,000 40 Total 802,000 6,810 (a) The Company plans to expand the charitable gaming facility to accommodate HRMs and table games.
Historical Racing Properties The following table summarizes key information regarding our current and planned historical racing properties: State Property City/ Location Floor Space (Sq. ft.) Historical Racing Machines ("HRMs") Retail Race & Sports Book (a) Kentucky Derby City Gaming Louisville, Kentucky 55,000 1,300 ü Kentucky Derby City Gaming Downtown Louisville, Kentucky 43,000 500 ü Kentucky Turfway Park Northern Kentucky 45,000 850 ü Kentucky Newport Northern Kentucky 23,000 460 ü Kentucky Oak Grove Southwestern Kentucky 180,000 1,230 ü Kentucky Ellis Park Northwestern Kentucky 40,000 300 ü Kentucky Owensboro (b) Northwestern Kentucky 28,000 600 ü New Hampshire Chasers (c) Salem, New Hampshire 4,000 (c) N/A Virginia Rosie's New Kent / Central Virginia 127,000 570 N/A Virginia Rosie's Richmond / Central Virginia 54,000 700 N/A Virginia Rosie's Dumfries / Northern Virginia 19,000 160 N/A Virginia The Rose (d) Dumfries / Northern Virginia 58,000 1,650 N/A Virginia Rosie's Hampton / Southern Virginia 38,000 700 N/A Virginia Rosie's Emporia / Southern Virginia 22,000 150 N/A Virginia Rosie's Collinsville / Southern Virginia 2,000 40 N/A Virginia Rosie's Vinton / Western Virginia 15,000 470 N/A Total 753,000 9,680 (a) The Company's retail sports betting business is included in the TwinSpires segment.
Chasers is a charitable gaming facility located approximately 30 miles from Boston, Massachusetts, that offers poker and a variety of table games. The Company plans to develop an expanded charitable gaming facility in Salem to accommodate HRMs and table games.
The Rose is scheduled to be completed late in the third quarter of 2024. New Hampshire On September 2, 2022, the Company completed the acquisition of Chasers Poker Room ("Chasers") located in Salem, New Hampshire. Chasers is a charitable gaming facility located approximately 30 miles from Boston, Massachusetts, that offers poker and a variety of table games.
All Other We have aggregated Arlington International Racecourse ("Arlington") as well as certain corporate operations, and other immaterial joint ventures in All Other to reconcile to consolidated results. Arlington Arlington is located on 326 acres in Arlington Heights, Illinois.
MVG is a gaming entertainment venue with harness racetrack, racing simulcast center, and a retail sports book. All Other We have aggregated Arlington International Racecourse ("Arlington") as well as certain corporate operations, and other immaterial joint ventures in All Other to reconcile to consolidated results.
Iowa As part of the P2E Transaction, the Company acquired Hard Rock Hotel and Casino Sioux City ("Hard Rock Sioux City"), which is a gaming facility and a hotel. Indiana The Company is investing up to $290.0 million in the development of the Terre Haute Casino Resort ("Terre Haute") in Terre Haute, Indiana.
Iowa As part of the P2E Transaction, the Company acquired Hard Rock Hotel and Casino Sioux City, which is a gaming facility with a hotel, several food and drink offerings, and event spaces.
Our focus is on attracting innovative and collaborative team members who want to build their skills in a successful and growing set of businesses focused on creating unique experiences for our guests. Our People As of December 31, 2022, we had a total of approximately 7,000 team members, of which 5,500 are full-time employees.
Human Capital We believe our human capital is material to our operations and core to the long-term success of our Company. Our focus is on attracting innovative and collaborative team members who want to build their skills in a successful and growing set of businesses focused on creating unique experiences for our guests.
Our brick-and-mortar casinos compete with traditional and Native American casinos, VLTs, state-sponsored lotteries, and other forms of legalized gaming in the U.S. and other jurisdictions. Legalized gambling is currently permitted in various forms in many states and Canada.
The industry faces competition from a variety of sources for discretionary consumer spending, including spectator sports, sports wagering, and other entertainment and gaming options. Our brick-and-mortar casinos compete with traditional and Native American casinos, VLTs, state-sponsored lotteries, and other forms of legalized gaming in the U.S. and other jurisdictions.
Northern Kentucky The Company opened Newport Racing & Gaming ("Newport") in October 2020. Newport is an HRM entertainment venue including a simulcast area that operates as an extension of Turfway Park. Turfway Park opened in September 2022 as a state-of-the-art live thoroughbred racing and historical racing entertainment venue with a sports bar and food and beverage offerings.
Newport Racing & Gaming is an HRM entertainment venue and simulcast area that operates as an extension of Turfway Park located in Newport, Kentucky. Northwestern Kentucky The Company acquired Ellis Park in Henderson, Kentucky on September 26, 2022. Ellis Park owns and operates a thoroughbred racetrack and conducts approximately 25 live race days a year.
The hotel is scheduled for completion by the end of the second quarter of 2023. 5 The Company is also building a new $90.0 million HRM entertainment venue called Derby City Gaming Downtown ("DCG Downtown") in an existing building in downtown Louisville which is scheduled for completion in the second half of 2023.
The new gaming space and hotel opened during the second quarter of 2023. In December 2023, the Company invested $90.0 million to build Derby City Gaming Downtown ("DCG Downtown") in an existing building in downtown Louisville.
As a content provider, we compete for wagering dollars in the simulcast market with other racetracks conducting races at or near the same times as our races. In recent years, competition has increased as more states legalize gaming and allow slot machines at racetracks with mandatory purse contributions.
In recent years, competition has increased as more states legalize gaming and allow slot machines at racetracks with mandatory purse contributions. Our HRM entertainment venues in Kentucky, Virginia, and New Hampshire compete with regional casinos in the area and other forms of legal and illegal gaming.
We plan to replace 3,400 temporary seats with 5,100 permanent covered stadium seats and a new 50,000 square-foot climate-controlled hospitality venue with reserved dining room tables, a trackside viewing terrace, and two new seating concourses to allow for better guest circulation and amenities for an incremental 2,000 reserved seats.
The First Turn Experience provides 5,100 permanent covered stadium seats and added a new 50,000 square-foot climate-controlled first floor hospitality venue with 2,000 reserved dining room tables and a trackside viewing terrace. 4 The Company is also investing up to $200.0 million to enhance the experience for nearly every guest.
Competition Overview We operate in a highly competitive industry with many participants, some of which have financial and other resources that are greater than ours. The industry faces competition from a variety of sources for discretionary consumer spending, including spectator sports, sports wagering and other entertainment and gaming options.
Corporate Corporate includes miscellaneous and other revenue, compensation expense, professional fees and other general and administrative expense not allocated to our segments. Competition Overview We operate in a highly competitive industry with many participants, some of which have financial and other resources that are greater than ours.
Other jurisdictions could legalize gambling in the future, and established gaming jurisdictions could award additional gaming licenses or permit the expansion of existing gaming operations. If additional gaming opportunities become available near our racing or gaming operations, such gaming operations could have a material adverse impact on our business.
Legalized gambling is currently permitted in various forms in many states and Canada. Other jurisdictions could legalize gambling in the future, and established gaming jurisdictions could award additional gaming licenses or permit the expansion of 9 existing gaming operations.
In September 2020, the Company opened the simulcast and HRM facility with an event center and food and beverage venues. The 128-room hotel opened in October 2020. Oak Grove also has a 1,200-person grandstand, 3,000-person capacity outdoor amphitheater and stage, a state-of-the-art equestrian center, and a recreational vehicle park.
Oak Grove also has a 3,000-person capacity outdoor amphitheater and stage, a state-of-the-art equestrian center, and a recreational vehicle park. Oak Grove conducts approximately 30 live racing days a year.
The transaction is subject to usual and customary closing conditions, including applicable regulatory notices and approvals, and is expected to close during the first half of 2023. Gaming The Gaming segment includes revenue and expenses for the casino properties and associated racetracks which support the casino license.
Gaming The Gaming segment includes revenue and expenses for the casino properties and associated racetracks which support the casino license.
The expansion includes a VIP gaming area, a new sports bar, a stage for live entertainment and an upscale-casual restaurant and bar to create a variety of new food and beverage options for gaming and hotel guests. We recently opened the new gaming space with 200 additional HRMs.
In 2023, the Company invested $78.0 million to expand the facility and to build a five-story hotel with 123 rooms including amenities to better serve and attract guests. The expansion includes a VIP gaming area, a new sports bar, a stage for live entertainment, and an upscale-casual restaurant and bar for gaming and hotel guests.
In May 2018, the United States Supreme Court struck down the 1992 Professional and Amateur Sports Protection Act, which had effectively banned sports wagering in most states. Removal of the ban gives states the authority to authorize sports wagering. Live and Historical Racing In 2022 and 2021, approximately 34,000 thoroughbred horse races were conducted in the U.S.
Removal of the ban gives states the authority to authorize sports wagering. Live and Historical Racing In 2023, approximately 32,000 thoroughbred horse races were conducted in the U.S., which was down 5% compared to 2022. As a racetrack operator, we compete for horses with other racetracks running live racing meets at or near the same time as our races.
Colonial Downs conducts live thoroughbred racing and has a one and one-quarter mile dirt track, the widest turf track oval in North America and two off-track betting facilities ("OTBs"). The Company is investing $400.0 million to construct a large gaming resort and 102-room hotel at the Dumfries, Virginia location with the potential for expansion of up to 1,800 HRMs.
The Company is investing approximately $460.0 million to construct The Rose Gaming Resort ("The Rose") in Dumfries, Virginia with a 102-room hotel and 1,650 HRMs as well as a number of food and beverage options. The Rose has the potential to be expanded to up to 1,800 HRMs.
The Company manages Lady Luck Casino Nemacolin ("Lady Luck Nemacolin"), approximately one mile from the Nemacolin Woodlands Resort under a management agreement that expires in June 2023. Equity Investments Illinois The Company acquired 61.3% equity ownership in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Casino Des Plaines ("Rivers Des Plaines"), in March 2019.
Pennsylvania Presque Isle Downs and Casino is a gaming facility with three dining facilities, an entertainment venue and thoroughbred racetrack that conducts approximately 80 live racing days each year. Equity Investments Illinois In March 2019, the Company acquired 61.3% equity ownership in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Casino Des Plaines ("Rivers Des Plaines").
The Company’s corporate staff consists of approximately 270 employees, approximately 260 of which are full-time. The number of seasonal employees fluctuates significantly through the course of the year primarily due to the seasonal nature of our businesses. We have the highest level of seasonal team members during the second quarter when we traditionally run the Kentucky Derby.
Our People As of December 31, 2023, we had a total of approximately 7,970 team members, of which approximately 5,660 are full-time employees. The number of seasonal employees fluctuates significantly through the course of the year primarily due to the seasonal nature of our properties that conduct live racing.
Fair Grounds also operates pari-mutuel wagering in 15 OTBs and Video Services LLC ("VSI") is the owner and operator of video poker machines in 12 OTBs in Louisiana. Maine Oxford Casino and Hotel ("Oxford"), located in Oxford, Maine, is a gaming facility with a hotel and one dining facility.
The stable area consists of barns that can accommodate approximately 1,900 horses and living quarters for approximately 130 8 people. Fair Grounds also operates over 500 HRMs in 15 OTBs and Video Services LLC ("VSI") is the owner and operator of video poker machines in 12 of those OTBs in Louisiana.
Financial information about these segments is set forth in Part II, Item 8. Financial Statements and Supplementary Data, contained within this Report. In the first quarter of 2022, we updated our operating segments to reflect the internal management reporting used by our chief operating decision maker to evaluate results of operations and to assess performance and allocate resources.
Business Segments The Company manages its business through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming. Financial information about these segments is set forth in Part II, Item 8. Financial Statements and Supplementary Data, contained within this Report.
For more information, refer to Note 4, Dispositions and Assets Held For Sale, to the notes to consolidated financial statements included in this Annual Report on Form 10-K. Corporate Corporate includes miscellaneous and other revenue, compensation expense, professional fees and other general and administrative expense not allocated to our segments.
Arlington On February 15, 2023, the Company sold its property at Arlington Heights, Illinois to the Chicago Bears for $197.2 million. For more information, refer to Note 4, Dispositions to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
The First Turn Experience is scheduled for completion for the 149 th Kentucky Derby in May 2023. The Company is also investing up to $200.0 million in a Paddock Project to enhance the experience for nearly every guest. The redesigned area will improve the flow of guests throughout the paddock.
The Company invested $90.0 million in the First Turn Experience which opened for the 149 th Kentucky Derby in May 2023.
Removed
During the first quarter of 2022, our chief operating decision maker decided to include the results of our United Tote business in the TwinSpires segment as we evolve our strategy to integrate the United Tote offering with TwinSpires Horse Racing, which we believe will create additional business-to-business revenue opportunities.
Added
During 2023, 72 live race days were conducted, however 14 of these race days were relocated to Ellis Park Racing and Gaming ("Ellis Park"). In 2024, we anticipate conducting approximately 83 live race days at the Churchill Downs Racetrack.
Removed
The prior year results in the accompanying Consolidated Statements of Comprehensive Income (Loss) conform to this presentation. Further discussion of segment financial information, and our planned investments in segment properties, is set forth in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations contained within this Report.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeNegative events and publicity could quickly and materially damage perceptions of us, our properties, or our industries, which, in turn, could adversely impact our business, financial condition or results of operations through loss of customers, loss of business opportunities, lack of acceptance of our company to operate in host communities, employee retention or recruiting difficulties or other difficulties. 16 An inability to attract and retain key and highly qualified and skilled personnel, as well as disruptions in the general labor market, could impact our ability to successfully develop, operate, and grow our business We believe that our success depends in part on our ability to hire, develop, motivate, and retain highly qualified and skilled employees throughout our organization.
Biggest changeNegative events and publicity could quickly and materially damage perceptions of us, our properties, or our industries, which, in turn, could adversely impact our business, financial condition or results of operations through loss of customers, loss of business opportunities, lack of acceptance of our company to operate in host communities, employee retention, or recruiting difficulties or other difficulties.
Plaintiffs in such lawsuits often seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss and defense costs relating to such lawsuits may not be accurately estimated. We evaluate all of the claims and proceedings involving us to assess the expected outcome, and where possible, we estimate the potential losses we may incur.
Plaintiffs in such lawsuits often seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss and defense costs relating to such lawsuits may not be accurately estimated. We evaluate all the claims and proceedings involving us to assess the expected outcome, and where possible, we estimate the potential losses we may incur.
Our operations are highly regulated and changes in the regulatory environment could adversely affect our business We conduct live and historical pari-mutuel wagering, online pari-mutuel wagering through ADWs, casino gaming, online gaming, and sports betting operations, which are subject to extensive state and for some local regulation.
Our operations are highly regulated and changes in the regulatory environment could adversely affect our business We conduct live and historical pari-mutuel wagering, online pari-mutuel wagering through ADWs, casino gaming, and sports betting operations, which are subject to extensive state and for some local regulation.
Furthermore, competition from internet lotteries, sweepstakes, illegal slot machines and skill games, fantasy sports and internet or mobile-based gaming platforms, which allow their customers to wager on a wide variety of sporting events and/or play Las Vegas-style casino games from home or in non-casino settings could divert customers from our properties and thus adversely affect our financial condition, results of operations and cash flows.
Furthermore, competition from internet lotteries, sweepstakes, illegal slot machines and skill 17 games, fantasy sports and internet, or mobile-based gaming platforms, which allow their customers to wager on a wide variety of sporting events and/or play Las Vegas-style casino games from home or in non-casino settings could divert customers from our properties and thus adversely affect our financial condition, results of operations, and cash flows.
Our systems also remain vulnerable to damage or interruption from floods, fires, power loss, telecommunication failures, terrorist cyber-attacks, hardware or software error, computer viruses, computer denial-of-service attacks and similar events. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated 20 problems could result in lengthy interruptions in our services.
Our systems also remain vulnerable to damage or interruption from floods, fires, power loss, telecommunication failures, terrorist cyber attacks, hardware or software error, computer viruses, computer denial-of-service attacks and similar events. Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems could result in lengthy interruptions in our services.
Such matters may include investigations or litigation from various parties, including vendors, customers, state and federal agencies, stockholders and employees relating to intellectual property, employment, consumer, personal injury, corporate governance, commercial or other matters arising in the ordinary course of business. We have also been subject to claims in cases concerning or similar to class action allegations.
Such matters may include investigations or litigation from various parties, including vendors, customers, state, and federal agencies, stockholders, and 23 employees relating to intellectual property, employment, consumer, personal injury, corporate governance, commercial, or other matters arising in the ordinary course of business. We have also been subject to claims in cases concerning or similar to class action allegations.
In the event of any default under our debt facilities or our other indebtedness, the lenders thereunder: • will not be required to lend any additional amounts to us, 24 • could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable and could terminate all commitments to extend further credit, or • could require us to apply all of our available cash to repay these borrowings.
In the event of any default under our debt facilities or our other indebtedness, the lenders thereunder: • will not be required to lend any additional amounts to us, • could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable and could terminate all commitments to extend further credit, or • could require us to apply all our available cash to repay these borrowings.
We are subject to payment-related risks, such as risk associated with the fraudulent use of credit or debit cards which could have adverse effects on our business due to chargebacks from customers 22 We allow funding and payments to accounts using a variety of methods, including electronic funds transfer ("EFT") and credit and debit cards.
We are subject to payment-related risks, such as risk associated with the fraudulent use of credit or debit cards which could have adverse effects on our business due to chargebacks from customers We allow funding and payments to accounts using a variety of methods, including electronic funds transfer ("EFT") and credit and debit cards.
Currently, there are proposals that would legalize internet poker, sports betting and other varieties of iGaming in a number of states. Expansion of land-based and iGaming in other jurisdictions (both regulated and unregulated) could further compete with our traditional and iGaming operations, which could have an adverse impact on our financial condition, results of operations and cash flows.
Currently, there are proposals that would legalize internet poker, sports betting, and other varieties of iGaming in a number of states. Expansion of land-based and iGaming in other jurisdictions (both regulated and unregulated) could further compete with our operations, which could have an adverse impact on our financial condition, results of operations, and cash flows.
We intend to focus on market access and our retail operations for our TwinSpires Sports and Casino business and there can be no assurance that we will be able to compete effectively or that we will generate sufficient returns on our investment During the second quarter of 2018, the U.S. Supreme Court overturned the federal ban on sports betting.
We intend to focus on market access and our retail operations for our TwinSpires sports betting business and there can be no assurance that we will be able to compete effectively or that we will generate sufficient returns on our investment During the second quarter of 2018, the U.S. Supreme Court overturned the federal ban on sports betting.
During inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. In particular, primarily in response to concerns about inflation, the U.S. Federal Reserve has significantly raised its benchmark federal funds rate, which has led to increases in interest rates in the credit markets. The U.S.
During inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. Primarily in response to concerns about inflation, the U.S. Federal Reserve has significantly raised its benchmark federal funds rate, which has led to increases in interest rates in the credit markets. The U.S.
Any losses we incur that are not adequately covered by insurance may decrease our future operating income, require us to fund replacements or repairs for destroyed property and reduce the funds available for payment of our obligations. 25 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Any losses we incur that are not adequately covered by insurance may decrease our future operating income, require us to fund replacements or repairs for destroyed property and reduce the funds available for payment of our obligations. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Due to the potential impact of negative publicity and inherent uncertainty related to the outcome of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on our results of operations, financial position or liquidity.
Due to the potential impact of negative publicity and inherent uncertainty related to the outcome of litigation, there can be no assurance that the resolution of any claim or proceeding would not have a material adverse effect on our results of operations, financial position or liquidity.
The approval process can be time-consuming and costly, and we cannot be sure that we will be successful. 23 Our Live and Historical Racing segment is subject to extensive state and local regulation, and we depend on continued state approval of legalized pari-mutuel wagering in states where we operate.
The approval process can be time-consuming and costly, and we cannot be sure that we will be successful. Our Live and Historical Racing segment is subject to extensive state and local regulation, and we depend on continued state approval of legalized pari-mutuel wagering in states where we operate.
Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure to the satisfaction of our players may harm our reputation and our ability to retain existing players and attract new players.
Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure 20 to maintain performance, reliability, security, and availability of our network infrastructure to the satisfaction of our players may harm our reputation and our ability to retain existing players and attract new players.
These costs could include the following: • restructuring charges associated with the acquisitions, • non-recurring transaction costs, including accounting and legal fees, investment banking fees and recognition of transaction-related costs or liabilities, and • costs of imposing financial and management controls and operating, administrative and information systems.
These costs could include the following: • restructuring charges associated with the acquisitions, 21 • non-recurring transaction costs, including accounting and legal fees, investment banking fees, and recognition of transaction-related costs or liabilities, and • costs of imposing financial and management controls and operating, administrative and information systems.
California has adopted the California Consumer Privacy Act of 2018 (the "CCPA"), which went into effect on January 1, 2020, providing California consumers greater control of the information 19 collected, stored, and sold, and other states are considering similar legislation.
California has adopted the California Consumer Privacy Act of 2018 (the "CCPA"), which went into effect on January 1, 2020, providing California consumers greater control of the information collected, stored, and sold, and other states are considering similar legislation.
Many states and municipalities, including ones in which we operate, are currently experiencing budgetary pressures that may make it more likely they would seek to impose additional taxes and fees on our operations.
Many states and municipalities, including ones in which we operate, are currently experiencing budgetary pressures that may make it more likely they would seek to impose additional taxes and fees on 16 our operations.
Certain industry groups negotiate these agreements on behalf of the horsemen (the "Horsemen’s Groups"). These agreements provide that we must receive the consent of the Horsemen’s Groups at the 18 racetrack conducting live races before we may allow third parties to accept wagers on those races.
Certain industry groups negotiate these agreements on behalf of the horsemen (the "Horsemen’s Groups"). These agreements provide that we must receive the consent of the Horsemen’s Groups at the racetrack conducting live races before we may allow third parties to accept wagers on those races.
The occurrence or threat of any such extraordinary event at our locations, particularly at Churchill Downs Racetrack and Kentucky Derby and Oaks week, could have a material negative effect on our business and results of operations.
The occurrence or threat of any such extraordinary event at our locations, particularly at Churchill Downs Racetrack during Kentucky Derby and Oaks week, could have a material negative effect on our business and results of operations.
We are subject to tax in multiple U.S. tax jurisdictions and judgment is required in determining our provision 15 for income taxes, deferred tax assets or liabilities and in evaluating our tax positions.
We are subject to tax in multiple U.S. tax jurisdictions and judgment is required in determining our provision for income taxes, deferred tax assets or liabilities, and in evaluating our tax positions.
Chargebacks occur when customers seek to void credit card or other payment transactions. Cardholders are intended to be able to reverse card transactions only if there has been unauthorized use of the card or the services contracted for have not been provided. In our business, customers occasionally seek to reverse online gaming losses through chargebacks.
Chargebacks occur when customers seek to void credit card or other payment transactions. Cardholders are intended to be able to reverse card transactions only if there has been unauthorized use of the card or the services contracted for have not been provided. In our business, customers occasionally seek to reverse online gaming and other wagering losses through chargebacks.
Recently, the prices of new machines have escalated faster than the rate of inflation and slot machine manufacturers have occasionally refused to sell slot machines featuring the most popular games, instead requiring participating lease arrangements in order to acquire the machines. Participation slot machine leasing arrangements typically require the payment of a fixed daily rental.
Recently, the prices of new machines have escalated faster than the rate of inflation and slot machine manufacturers have occasionally refused to sell slot machines featuring the most popular games, instead requiring participating lease arrangements to acquire the machines. Participation slot machine leasing arrangements typically require the payment of a fixed daily rental.
Our Company faces significant competition, and we expect competition levels to increase We face an increasingly high degree of competition among a large number of participants operating from physical locations and/or through online or mobile platforms, including destination casinos, riverboat casinos; dockside casinos; land-based casinos; video lottery; iGaming; sports betting; gaming at taverns in certain states, such as Illinois; gaming at truck stop establishments in certain states, such as Louisiana and Pennsylvania; historical horse racing in Kentucky; sweepstakes and poker machines not located in casinos; fantasy sports; Native American gaming; and other forms of gaming in the U.S.
Our Company faces significant competition, and we expect competition levels to increase We face an increasingly high degree of competition among a large number of participants operating from physical locations and/or through online or mobile platforms, including destination casinos, riverboat casinos; dockside casinos; land-based casinos; video lottery; iGaming; sports betting; gaming at taverns in certain states, such as Illinois; gaming at truck stops, gas stations, and other establishments in certain states, such as Louisiana, Pennsylvania, Virginia, and Kentucky; historical horse racing in Kentucky; sweepstakes and poker machines not located in casinos; fantasy sports; Native American gaming; and other forms of gaming in the U.S.
We buy insurance for all of our racetracks; however, our coverage may not be sufficient for all losses.
We buy insurance for all our racetracks; however, our coverage may not be sufficient for all losses.
The COVID-19 global pandemic resulted in the temporary suspension of operations of all of our wholly-owned gaming properties, certain wholly-owned racing operations, and the two casino properties related to our equity investments.
For example, the COVID-19 global pandemic resulted in the temporary suspension of operations of all of our wholly owned gaming properties, certain wholly owned racing operations, and the two casino properties related to our equity investments.
The success of our retail and online sportsbook and online casino operations are dependent on a number of factors that are beyond our control, including: • the timing of adoption of regulations authorizing betting and gaming activities, • operating requirements and other restrictions, • the number of allowable industry participants, • the license fees and tax rates, • our ability to gain market share in a newly developing market, • the potential that the market does not develop as we anticipate, • our ability to compete with new entrants in the market, • changes in consumer demographics and public tastes and preferences, and • the availability and popularity of other forms of entertainment.
The success of our retail and online sports books is dependent on several factors that are beyond our control, including: • the timing of adoption of regulations authorizing betting and gaming activities, • operating requirements and other restrictions, 19 • the number of allowable industry participants, • the license fees and tax rates, • our ability to gain market share in a newly developing market, • the potential that the market does not develop as we anticipate, • our ability to compete with new entrants in the market, • changes in consumer demographics and public tastes and preferences, and • the availability and popularity of other forms of entertainment.
Our systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor, may not be successful.
Our systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor or joint venture partner, may not be successful.
We may not be able to respond to rapid technological changes in a timely manner, which may cause customer dissatisfaction Our TwinSpires and Gaming segments are characterized by the rapid development of new technologies and the continuous introduction of new products.
We may not be able to respond to rapid technological changes in a timely manner, which may cause customer dissatisfaction Our TwinSpires segment and gaming and historical racing properties are characterized by the rapid development of new technologies and the continuous introduction of new products.
There can be no assurance as to the returns that we will receive from TwinSpires Sports and Casino business. Operational Risks Our business is subject to online security risk, including cyber-security breaches.
There can be no assurance as to the returns that we will receive from TwinSpires sports betting business. Operational Risks Our business is subject to online security risk, including cybersecurity breaches.
Financial Risks Our debt facilities contain restrictions that limit our flexibility in operating our business Our debt facilities contain a number of covenants that impose significant operating and financial restrictions on our business, including restrictions on our ability to, among other things, take the following actions: • incur additional debt or issue certain preferred shares, • pay dividends on or make distributions in respect of our capital stock, repurchase common shares or make other restricted payments, • make certain investments, • sell certain assets or consolidate, merge, sell or otherwise dispose of all or substantially all of our assets, • create liens on certain assets, • enter into certain transactions with our affiliates, and • designate our subsidiaries as unrestricted subsidiaries.
Any of these events could have a material adverse impact on our financial condition, results of operations, and cash flows. 24 Financial Risks Our debt facilities contain restrictions that limit our flexibility in operating our business Our debt facilities contain several covenants that impose significant operating and financial restrictions on our business, including restrictions on our ability to, among other things, take the following actions: • incur additional debt or issue certain preferred shares, • pay dividends on or make distributions in respect of our capital stock, repurchase common shares or make other restricted payments, • make certain investments, • sell certain assets or consolidate, merge, sell, or otherwise dispose of all or substantially all our assets, • create liens on certain assets, • enter into certain transactions with our affiliates, and • designate our subsidiaries as unrestricted subsidiaries.
The concentration and evolution of the slot machine and HRM manufacturing industry or other technological conditions could impose additional costs on us A significant amount of our revenue is attributable to slot, HRM, VLTs, and video poker machines operated by us at our properties, and there are a limited number of slot machine and HRM manufacturers servicing the industry.
Further technological developments may cause our products or technologies to become obsolete or noncompetitive. 18 The concentration and evolution of the slot machine and HRM manufacturing industry or other technological conditions could impose additional costs on us A significant amount of our revenue is attributable to slot, HRM, VLTs, and video poker machines operated by us at our properties, and there are a limited number of slot machine and HRM manufacturers servicing the industry.
Our insurance costs may increase, we may not be able to obtain similar insurance coverage in the future, and the extent to which we can recover under our insurance policies for damages sustained at our operating properties in the event of inclement weather and casualty events, all could adversely affect our business We renew our insurance policies on an annual basis.
Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or significantly increase our cost of capital. 25 Our insurance costs may increase, we may not be able to obtain similar insurance coverage in the future, and the extent to which we can recover under our insurance policies for damages sustained at our operating properties in the event of inclement weather and casualty events, all could adversely affect our business We renew our insurance policies on an annual basis.
If attendance at and wagering on live horse racing declines, it could have a material adverse impact on our business. The number and level of sponsorships are important to the success of the Kentucky Derby.
If attendance at and wagering on live horse racing declines, it could have a material adverse impact on our business. The number and level of sponsorships are important to the success of the Kentucky Derby. Our ability to retain sponsors, acquire new sponsors, and compete for sponsorships and advertising dollars could have a material adverse impact on our business.
Thirty-three states have authorized sports betting and thirty of these states have sports betting operational as of December 31, 2022. Additional states may legalize sports betting in the future. Each state has different structures for the number of allowable industry participants, license fees, taxes, and other operational requirements.
Sports betting has been authorized and is operational in thirty-eight states and the District of Columbia as of December 31, 2023. Additional states may legalize sports betting in the future. Each state has different structures for the number of allowable industry participants, license fees, taxes, and other operational requirements.
While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, interest rate increases, disruption in the credit markets, changes that may result from the implementation of new benchmark rates that replace the London Interbank Offered Rate ("LIBOR"), or changes to our credit ratings could negatively impact the availability or cost of funding.
While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, interest rate increases, disruption in the credit markets, or changes to our credit ratings could negatively impact the availability or cost of funding.
For example, we've announced multiple major multi-year capital investments to transform key areas of Churchill Downs Racetrack, as well as other capital investments such as the build out of Derby City Gaming Downtown, Rosie's Emporia and Dumfries, the Ellis Park Owensboro Annex, a charitable gaming facility in New Hampshire and the Terre Haute Casino Resort.
For example, we've announced multiple major multi-year capital investments to transform key areas of Churchill Downs Racetrack, as well as other capital investments such The Rose Dumfries, Owensboro Racing & Gaming, a charitable gaming facility in New Hampshire, and the Terre Haute Casino Resort.
Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry, and hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks. Many companies, including ours, have been the targets of such attacks.
Security breaches, computer malware, and computer hacking attacks have become more prevalent in our industry, and hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks. Many companies, including ours, have been the targets of such attacks. Moreover, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.
Acts of fraud or cheating in our gaming businesses through the use of counterfeit chips, covert schemes and other tactics, possibly in collusion with our employees, may be attempted or committed by our gaming customers with the aim of increasing their winnings.
Acts of fraud or cheating in our gaming businesses using counterfeit chips, covert schemes, and other tactics, possibly in collusion with our employees, may be attempted or committed by our gaming customers with the aim of increasing their winnings. Our gaming customers, visitors, and employees may also commit crimes such as theft to obtain chips not belonging to them.
If we are unsuccessful in overcoming these risks, it could have a material adverse impact on our business. 21 The development of new venues and the expansion of existing facilities is costly and susceptible to delays, cost overruns and other uncertainties We may decide to develop, construct and open hotels, casinos, other gaming venues, or racetracks in response to opportunities that may arise.
The development of new venues and the expansion of existing facilities is costly and susceptible to delays, cost overruns, and other uncertainties We may decide to develop, construct, and open hotels, casinos, other gaming venues, or racetracks in response to opportunities that may arise.
Our ability to retain sponsors, acquire new sponsors, and compete for sponsorships and advertising dollars could have a material adverse impact on our business. 17 We are subject to significant risks associated with our equity investments, strategic alliances, and other third-party agreements We pursue certain license opportunities, development projects and other strategic business opportunities through equity investments, joint ventures, license arrangements and other alliances with third parties.
We are subject to significant risks associated with our equity investments, strategic alliances, and other third-party agreements We pursue certain license opportunities, development projects, and other strategic business opportunities through equity investments, joint ventures, license arrangements, and other alliances with third parties.
Any failure on our part to comply with these laws or our privacy policies may subject us to significant liabilities, including governmental enforcement actions or litigation.
Any failure on our part to comply with these laws or our privacy policies may subject us to significant liabilities, including governmental enforcement actions or litigation. We have experienced cyber attacks in the past. While these attacks did not have a significant impact to the Company, we may continue to experience such attacks.
Horse racing is an inherently dangerous sport, and our racetracks are subject to personal injury litigation Personal injuries and injuries to horses have occurred during races or workouts, and may continue to occur, which could subject us to negative publicity and / or litigation.
Enforcement of such regulations have been receiving increased governmental attention and compliance with these and other environmental laws can, in some circumstances, require significant capital expenditures (including with respect to fines). 22 Horse racing is an inherently dangerous sport, and our racetracks are subject to personal injury litigation Personal injuries and injuries to horses have occurred during races or workouts, and may continue to occur, which could subject us to negative publicity and / or litigation.
If any of these lenders accelerate the repayment of borrowings, we may not have sufficient assets to repay our indebtedness and our lenders could exercise their rights against the collateral we have granted them Increases to interest rates (due to inflation or otherwise), disruptions in the credit markets, or changes to our credit ratings may adversely affect our business.
We have pledged a significant portion of our assets as collateral under our debt facilities. If any of these lenders accelerate the repayment of borrowings, we may not have sufficient assets to repay our indebtedness and our lenders could exercise their rights against the collateral we have granted them.
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The current novel coronavirus (COVID-19) global pandemic has adversely affected, and could continue to adversely affect our business, financial condition and financial results. Other major public health issues could adversely affect our business, financial condition and financial results in the future In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic.
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An inability to attract and retain key and highly qualified and skilled personnel, as well as disruptions in the general labor market, could impact our ability to successfully develop, operate, and grow our business We believe that our success depends in part on our ability to hire, develop, motivate, and retain highly qualified and skilled employees throughout our organization.
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Considerable uncertainty still surrounds the continued effects of the COVID-19 virus, including the emergence of variant strains, and the extent of and effectiveness of responses taken on international, national and local levels.
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If we are unsuccessful in overcoming these risks, it could have a material adverse impact on our business.
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The long-term impact of COVID-19 on the U.S. and world economies and continued impact on our business remains uncertain, the duration and scope of which cannot currently be predicted.
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Increases to interest rates (due to inflation or otherwise), disruptions in the credit markets, or changes to our credit ratings may adversely affect our business.
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The COVID-19 pandemic and the measures taken by national, state, and local authorities in response have adversely affected and could in the future materially adversely impact the Company's business, results of operations, and financial condition. Our operating results depend, in large part, on revenues derived from customers visiting our casinos and racetracks.
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During the course of the pandemic, we experienced temporary suspension of operations of all of our wholly-owned gaming properties, certain wholly-owned racing operations, and the two casino properties related to our equity investments. The introduction of vaccine and facemask mandates in certain locations also impacted the number of customers visiting our properties.
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The Company continues to monitor the COVID-19 situation and take appropriate actions in accordance with the recommendations and requirements of relevant authorities.
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The extent to which the COVID-19 pandemic may impact the Company's long-term operational and financial performance remains uncertain and will depend on many factors outside the Company's control, including the timing, extent, trajectory, and duration of the pandemic, the emergence of new variants, the development, availability, distribution, and effectiveness of vaccines and treatments, the imposition of protective public safety measures, and the impact of the pandemic on the global economy.
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Our gaming customers, visitors and employees may also commit crimes such as theft in order to obtain chips not belonging to them.
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Further technological developments may cause our products or technologies to become obsolete or noncompetitive.
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Enforcement of such regulations have been receiving increased governmental attention and compliance with these and other environmental laws can, in some circumstances, require significant capital expenditures (including with respect to fines).
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Any of these events could have a material adverse impact on our financial condition, results of operations, and cash flows.
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We have pledged a significant portion of our assets as collateral under our debt facilities.
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Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or significantly increase our cost of capital.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease the following real property: Live and Historical Racing • Kentucky ◦ Churchill Downs Racetrack in Louisville - we lease 158 acres under a 30-year lease entered into in 2002 where we transferred title of the facility to the City of Louisville, and retained the right to re-acquire the facility at any time for $1.00, subject to the terms of the lease as part of the financing of the improvements to the facility. ◦ Newport Racing & Gaming in Northern Kentucky • New Hampshire - Chasers Poker Room in Salem • Virginia ◦ Rosie's in Collinsville ◦ Rosie's in Hampton ◦ Rosie's in Dumfries TwinSpires • Kentucky ◦ TwinSpires.com and Brisnet offices in Lexington ◦ TwinSpires and United Tote offices in Louisville • New Jersey - TwinSpires offices in Toms River • California - United Tote offices in San Diego • Oregon - United Tote offices Portland 26 Gaming • Louisiana - Certain VSI properties in New Orleans • Mississippi - the land and casino for Harlow's Casino Resort & Spa in Greenville • Pennsylvania - the building for Lady Luck Casino Nemacolin in Farmington All Other • Kentucky - Corporate headquarters in Louisville • Virginia - Corporate office space in Vinton
Biggest changePROPERTIES Live and Historical Racing • Kentucky ◦ Louisville ▪ Churchill Downs Racetrack - we lease 158 acres under a 30-year lease that began in 2002 where we transferred title of the facility to the City of Louisville and retained the right to re-acquire the facility at any time for $1.00, subject to the terms of the lease as part of the financing of improvements to the facility. ▪ Churchill Downs auxiliary training facility ▪ Derby City Gaming & Hotel ▪ Derby City Gaming Downtown ◦ Southwestern Kentucky - Oak Grove Racing & Gaming ◦ Northern Kentucky ▪ Turfway Park Racing & Gaming ▪ Newport Racing & Gaming (leased) ◦ Northwestern Kentucky ▪ Ellis Park Racing & Gaming ▪ Owensboro Racing & Gaming (Opening 1 st quarter 2025) • Virginia ◦ Central Virginia ▪ Colonial Downs Racetrack & Rosie's in New Kent ▪ Rosie’s in Richmond ▪ Office space in Richmond (leased) ◦ Northern Virginia ▪ The Rose in Dumfries (Opening late 3 rd quarter 2024) ▪ Rosie’s in Dumfries (leased) ◦ Southern Virginia ▪ Rosie's in Emporia ▪ Rosie's in Collinsville (leased) ▪ Rosie's in Hampton (leased) ◦ Western Virginia - Rosie's in Vinton • New Hampshire ◦ Chasers Poker Room in Salem (leased) TwinSpires • Kentucky ▪ TwinSpires.com and Brisnet offices in Lexington (leased) ▪ TwinSpires and United Tote offices in Louisville (leased) • California - United Tote offices in San Diego (leased) • Oregon - United Tote offices in Portland (leased) • Florida - Exacta offices in Boynton Beach, Florida (leased) 27 Gaming • Florida - Calder Casino in Miami Gardens • Indiana - Terre Haute Casino Resort in Terre Haute (Opening 2 nd quarter 2024) • Iowa - Hard Rock Hotel & Casino in Sioux City • Louisiana - Fair Grounds Race Course & Slots and certain VSI properties in New Orleans (certain ones leased) • Maine - Oxford Casino & Hotel in Oxford • Maryland - Ocean Downs Casino & Racetrack in Ocean City • Mississippi - Riverwalk Casino Hotel in Vicksburg • Mississippi - Harlow's Casino Resort & Spa in Greenville (land leased) • New York - del Lago Resort & Casino in Waterloo • Pennsylvania - Presque Isle Downs & Casino in Erie All Other • Kentucky - Corporate headquarters in Louisville (leased)
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PROPERTIES We own the following real property: Live and Historical Racing • Kentucky ◦ 100 acres at Churchill Downs and our auxiliary training facility at Derby City Gaming in Louisville ◦ Derby City Gaming in Louisville ◦ Derby City Gaming Downtown in Louisville ◦ Oak Grove Racing & Gaming in Southwestern Kentucky ◦ Turfway Park in Northern Kentucky ◦ Ellis Park Racing & Gaming in Northwestern Kentucky • Virginia ◦ Colonial Downs Racetrack & Rosie's in New Kent ◦ Rosie's in Vinton ◦ Rosie's in Richmond Gaming • Florida - Calder Casino in Miami Gardens • Indiana - Terre Haute Casino Resort in Terre Haute (Opening in 2024) • Iowa - Hard Rock Hotel & Casino in Sioux City • Louisiana - Fair Grounds Race Course & Slots and certain VSI properties in New Orleans • Maine - Oxford Casino & Hotel in Oxford • Maryland - Ocean Downs Casino & Racetrack in Ocean City • Mississippi - Riverwalk Casino Hotel in Vicksburg • New York - del Lago Resort & Casino in Waterloo • Pennsylvania - Presque Isle Downs & Casino in Erie All Other • Illinois - Arlington International Race Course in Arlington Heights - We closed on the sale of the property to the Chicago Bears on February 15, 2023.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. LEGAL PROCEEDINGS In addition to the matters described below, we are also involved in ordinary routine litigation matters which are incidental to our business. Bob Baffert and Bob Baffert Racing Stables, Inc. v.
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ITEM 3. LEGAL PROCEEDINGS We are involved in ordinary routine litigation matters which are incidental to our business. Refer to Note 19, Contingencies to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K, for further information. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 28 PART II
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Churchill Downs Incorporated, Bill Carstanjen and Alex Rankin On February 28, 2022, plaintiffs Bob Baffert and Bob Baffert Racing Stables, Inc. filed a complaint and motion for preliminary injunction against Churchill Downs Incorporated, its Chief Executive Officer Bill Carstanjen, and its Chairman of the Board of Directors Alex Rankin in the U.S.
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District Court for the Western District of Kentucky, arising out of the Company’s decision to suspend Mr. Baffert from entering horses trained by him at any Company-owned racetrack for a period of two years. The Company’s two-year suspension of Mr.
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Baffert came after Baffert-trained horse, Medina Spirit, finished first in the 147th running of the Kentucky Derby but subsequently tested positive for betamethasone, a banned race-day substance. Plaintiffs allege that the Company’s decisions to suspend Mr.
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Baffert from racing at any Company-owned racetrack and to prohibit horses trained by him (or any other suspended trainer) from accumulating Derby-qualifying points were unlawful. Plaintiffs assert claims for (i) violation of the due process clause, (ii) unlawful exclusion, (iii) violations of the federal antitrust laws, (iv) tortious interference with contract, and (v) tortious interference with prospective business advantage.
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In addition to and separate from the Company’s suspension of Mr. Baffert, on February 21, 2022, the Kentucky Horse Racing Commission ("KHRC") Board of Stewards suspended Mr. Baffert from racing in Kentucky for 90 days and issued a fine to him. The KHRC rejected Mr. Baffert’s requests to stay the suspension. Mr.
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Baffert unsuccessfully sought judicial intervention relieving him from the KHRC suspension. On March 21, 2022, the Franklin County Circuit Court concluded Mr. Baffert was not entitled to a stay of the KHRC suspension and that he had not satisfied a single element required for a temporary injunction of the KHRC suspension.
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This decision was affirmed by the Kentucky Court of Appeals on April 1, 2022 in an order denying Mr. Baffert’s motion for emergency relief. After the Kentucky Court of Appeals allowed the KHRC’s 90-day suspension of Mr. Baffert to stand, plaintiffs voluntarily withdrew their motion for preliminary injunction against the Company without prejudice.
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On May 2, 2022, the Company filed a motion to dismiss plaintiffs’ complaint. Plaintiffs filed a renewed motion for preliminary injunction on December 15, 2022. On February 17, 2023, the Court issued a memorandum opinion and order granting the Company’s motion to dismiss in part, allowing a portion of the due process claim to remain.
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In the same order, the Court denied Plaintiffs’ motion for preliminary injunction, concluding that Plaintiff had not established irreparable injury and was not likely to succeed on the merits of the remaining claim. The Company, Mr. Carstanjen, and Mr.
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Rankin intend to defend this matter vigorously and believe that there are meritorious legal and factual defenses against plaintiffs' allegations and requests for relief. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 27 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Purchases of Common Stock The following table provides information with respect to shares of common stock that we repurchased during the quarter ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased under the Plans or Programs (in millions) (1) October 2022 157,334 $ 202.23 100,435 $ 280.2 November 2022 22,961 216.35 22,961 275.9 December 2022 31,230 215.02 23,328 270.2 Total 211,525 $ 205.65 146,724 (1) On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million ("2021 Stock Repurchase Program").
Biggest changeIssuer Purchases of Equity Securities The following table provides information with respect to shares of common stock that we repurchased during the quarter ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased under the Plans or Programs (in millions) (1) October 2023 112,562 $ 108.98 — $ 232.9 November 2023 60,652 115.63 60,652 225.9 December 2023 111,154 123.70 90,742 214.9 Total 284,368 $ 116.15 151,394 (1) On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million ("2021 Stock Repurchase Program").
Shareholder Return Performance Graph The following performance graph and related information shall not be deemed "soliciting material" nor to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent we specifically incorporate it by reference into such filing. 28 The following graph depicts the cumulative total shareholder return, assuming reinvestment of dividends, for the periods indicated for our Common Stock compared to the Russell 1000 Index, S&P Midcap 400 Index, and the S&P 500 Index.
Shareholder Return Performance Graph The following performance graph and related information shall not be deemed "soliciting material" nor to be "filed" with the SEC, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent we specifically incorporate it by reference into such filing. 29 The following graph depicts the cumulative total shareholder return, assuming reinvestment of dividends, for the periods indicated for our Common Stock compared to the Russell 1000 Index, S&P Midcap 400 Index, and the S&P 500 Index.
Used with permission. All rights reserved. NOTE 2: Index Data: Copyright Standard and Poor’s, Inc. Used with permission. All rights reserved. ITEM 6. [RESERVED] 29
Used with permission. All rights reserved. NOTE 2: Index Data: Copyright Standard and Poor’s, Inc. Used with permission. All rights reserved. ITEM 6. [RESERVED] 30
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Stock The Company's common stock is traded on the Nasdaq Global Select Market under the symbol CHDN. As of February 15, 2023 , there were approximately 2,230 shareholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Stock The Company's common stock is traded on the Nasdaq Global Select Market under the symbol CHDN. As of February 14, 2024, there were approximately 2,130 shareholders of record.
We declared a dividend of $0.714 in October 2022, which was paid in January 2023, and we declared a dividend of $0.667 in October 2021, which was paid in January 2022.
We declared a dividend of $0.382 in October 2023, which was paid in January 2024, and we declared a dividend of $0.357 in October 2022, which was paid in January 2023.
For more information, refer to Note 10, Shareholders' Equity, to the notes to consolidated financial statements included in this Annual Report on Form 10-K.
The repurchase program has no time limit and may be suspended or discontinued at any time. For more information, refer to Note 10, Shareholders' Equity to the notes to consolidated financial statements included in this Annual Report on Form 10-K.
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The 2021 Stock Repurchase Program includes and is not in addition to the unspent amount remaining under the prior 2018 Stock Purchase Program authorization. The repurchase program has no time limit and may be suspended or discontinued at any time.
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We consider the Russell 1000 Index to be our most comparable peer group index. 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Churchill Downs Incorporated $ 100.00 $ 169.49 $ 241.41 $ 299.39 $ 263.58 $ 337.49 Russell 1000 Index $ 100.00 $ 131.43 $ 158.98 $ 201.03 $ 162.58 $ 205.72 S&P Midcap 400 Index $ 100.00 $ 126.20 $ 143.44 $ 178.95 $ 155.58 $ 181.15 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 NOTE 1: Index Data: Copyright Russell Investments.
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During 2021, our Company moved from the Russell 2000 Index to the Russell 1000 Index due to our increase in market capitalization. We now consider the Russell 1000 Index to be our most comparable peer group index.
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We added the S&P Midcap 400 Index as a comparison beginning in our Annual Report on Form 10-K for the year ended December 31, 2018.
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The S&P Midcap 400 Index includes the Company's results and also reflects companies which have a more comparable market capitalization than the S&P 500 Index. 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Churchill Downs Incorporated $ 100.00 $ 105.47 $ 178.75 $ 254.61 $ 315.76 $ 277.99 Russell 1000 Index $ 100.00 $ 95.22 $ 125.14 $ 151.37 $ 191.42 $ 154.80 S&P Midcap 400 Index $ 100.00 $ 88.92 $ 112.21 $ 127.54 $ 159.12 $ 138.34 S&P 500 Index $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 NOTE 1: Index Data: Copyright Russell Investments.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changePartially offsetting these increases was a decrease of $22.3 million primarily from our Mississippi and Pennsylvania properties due to the current economic conditions. • All Other Adjusted EBITDA decreased $17.3 million primarily due to the elimination of the $9.7 million operating income related to Arlington as a result of ceasing racing and simulcast operations at the end of 2021 and a $7.6 million increase in Corporate compensation related expenses, legal fees, and charitable donations. 37 Reconciliation of Comprehensive Income to Adjusted EBITDA Years Ended December 31, Change (in millions) 2022 2021 Net income and comprehensive income attributable to Churchill Downs Incorporated $ 439.4 $ 249.1 $ 190.3 Net loss attributable to noncontrolling interest — — — Net income 439.4 249.1 190.3 Loss from discontinued operations, net of tax — — — Income from continuing operations, net of tax 439.4 249.1 190.3 Additions: Depreciation and amortization 113.7 103.2 10.5 Interest expense 147.3 84.7 62.6 Income tax provision 169.4 94.5 74.9 EBITDA $ 869.8 $ 531.5 $ 338.3 Adjustments to EBITDA: Selling, general and administrative: Stock-based compensation expense $ 31.8 $ 27.8 $ 4.0 Legal reserves 3.8 — 3.8 Other charges 7.4 0.2 7.2 Pre-opening expense and other expense 13.2 5.8 7.4 Other income, expense: Interest, depreciation and amortization expense related to equity investments 42.8 41.5 1.3 Changes in fair value of Rivers Des Plaines' interest rate swaps (12.6) (12.9) 0.3 Rivers Des Plaines' legal reserves and transactions costs 0.6 9.9 (9.3) Other charges and recoveries, net 1.0 — 1.0 Gain on Calder land sale (274.6) — (274.6) Transaction expense, net 42.1 7.9 34.2 Asset impairments 38.3 15.3 23.0 Total adjustments to EBITDA (106.2) 95.5 (201.7) Adjusted EBITDA $ 763.6 $ 627.0 $ 136.6 Consolidated Balance Sheet The following table is a summary of our overall financial position: As of December 31, Change (in billions) 2022 2021 Total assets $ 6.2 $ 3.0 $ 3.2 Total liabilities 5.6 2.7 2.9 Total shareholders’ equity 0.6 0.3 0.3 • Total assets increased $3.2 billion driven by a $2.4 billion increase in goodwill and other intangibles from the P2E, Ellis Park and Chasers Transactions and a $1.0 billion increase in property and equipment, net from the P2E and Ellis Park Transactions and construction projects.
Biggest changeWe received $6.3 million of insurance proceeds in 2022 compared to $1.6 million in 2023. • All Other Adjusted EBITDA decreased $12.3 million primarily driven by increased corporate compensation expenses. 38 Reconciliation of Comprehensive Income to Adjusted EBITDA Years Ended December 31, Change (in millions) 2023 2022 Net income and comprehensive income $ 417.3 $ 439.4 $ (22.1) Additions: Depreciation and amortization 169.0 113.7 55.3 Interest expense 268.4 147.3 121.1 Income tax provision 144.5 169.4 (24.9) EBITDA $ 999.2 $ 869.8 $ 129.4 Adjustments to EBITDA: Stock-based compensation expense $ 32.9 $ 31.8 $ 1.1 Legal reserves (1.2) 3.8 (5.0) Pre-opening expense 18.6 13.2 5.4 Arlington exit costs 9.4 5.7 3.7 Other expense, net 7.0 1.7 5.3 Transaction expense, net 4.8 42.1 (37.3) Asset impairments 24.6 38.3 (13.7) Other income, expense: Interest, depreciation and amortization expense related to equity investments 40.2 42.8 (2.6) Changes in fair value of Rivers Des Plaines' interest rate swaps — (12.6) 12.6 Rivers Des Plaines' legal reserves and transactions costs — 0.6 (0.6) Other charges and recoveries, net 2.4 1.0 1.4 Gain on the sale of assets (114.0) (274.6) 160.6 Total adjustments to EBITDA 24.7 (106.2) 130.9 Adjusted EBITDA $ 1,023.9 $ 763.6 $ 260.3 Consolidated Balance Sheet The following table is a summary of our overall financial position: As of December 31, Change (in billions) 2023 2022 Total assets $ 7.0 $ 6.2 $ 0.8 Total liabilities 6.1 5.6 0.5 Total shareholders’ equity 0.9 0.6 0.3 • Total assets increased $0.8 billion driven by increased capital expenditures and assets acquired in the Exacta Transaction, partially offset by the sale of our Arlington property and the Presque Isle impairment in 2023. • Total liabilities increased $0.5 billion driven by increased notes payable, accrued capital expenditures, and increased deferred revenue primarily due to increased advanced ticket sales related to the 150 th Kentucky Derby, partially offset by a net pay down of long-term debt. • Total shareholders’ equity increased $0.3 billion driven by increased net income and stock-based compensation, partially offset by share repurchases. 39 Liquidity and Capital Resources Our primary sources of liquidity and capital resources have been and will continue to be cash flow from operations, borrowings under our credit facility, and proceeds from the issuance of debt securities.
The Company acquired the following properties as part of the P2E Transaction: Colonial Downs Racetrack ("Colonial Downs") in New Kent, Virginia, six historical racing entertainment venues in Virginia, del Lago Resort & Casino in Waterloo, New York ("del Lago"), and the Hard Rock Hotel & Casino in Sioux City, Iowa ("Hard Rock Sioux City").
The Company acquired the following properties as part of the P2E Transaction: Colonial Downs Racetrack in New Kent, Virginia, six historical racing entertainment venues in Virginia, del Lago Resort & Casino in Waterloo, New York, and the Hard Rock Hotel & Casino in Sioux City, Iowa.
Adjusted EBITDA is a supplemental measure of our performance that is not required by or presented in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results.
Adjusted EBITDA is a supplemental measure of our performance that is not required by or presented in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results.
Goodwill and certain indefinite-lived intangible assets Acquisition of certain identifiable indefinite-lived intangible assets In conjunction with the acquisition of a business, the Company records identifiable indefinite-lived intangible assets acquired at their respective fair values as of the date of acquisition. Our indefinite-lived intangible assets primarily consist of gaming rights and trademarks.
Goodwill and certain intangible assets Acquisition of certain identifiable intangible assets In conjunction with the acquisition of a business, the Company records identifiable intangible assets acquired at their respective fair values as of the date of acquisition. Our indefinite-lived intangible assets primarily consist of gaming rights and trademarks.
Environmental, Social, and Governance • We expanded our ESG efforts including the ongoing promotion of responsible gaming; initiatives at our properties to lessen energy and water usage, to decrease carbon emissions, and to responsibly manage waste; increasing investments in the communities in which we operate and supporting our teams through educational and leadership development; and further diversification of our Board of Directors and increasing engagement with our shareholders. • We continued our diversity, equity, and inclusion initiatives (DE&I) including the roll-out of our mission, vision, culture statement, and core values company-wide.
Environmental, Social, and Governance • We expanded our ESG efforts including the ongoing promotion of responsible gaming; initiatives at our properties to lessen energy and water usage, to decrease carbon emissions, and to responsibly manage waste; increasing investments in the communities in which we operate and supporting our teams through educational and leadership development; and further diversification of our Board of Directors and increasing engagement with our shareholders. • We also continued our diversity, equity, and inclusion initiatives (DE&I) including the roll-out of our mission, vision, culture statement, and core values company-wide.
The Additional 2028 Notes were issued at 103.25% of the principal amount, plus interest deemed to have accrued from January 15, 2021, with interest payable on January 15 th and July 15 th of each year, commencing on July 15, 2021. The 2028 Senior 41 Notes will vote as one class under the indenture governing the 2028 Senior Notes.
The Additional 2028 Notes were issued at 103.25% of the principal amount, plus interest deemed to have accrued from January 15, 2021, with interest payable on January 15 th and July 15 th of each year, commencing on July 15, 2021. The 2028 Senior Notes will vote as one class under the indenture governing the 2028 Senior Notes.
Assessments of goodwill and indefinite-lived intangible assets We perform our annual review for impairment of goodwill and indefinite-lived intangible assets on April 1 of each fiscal year, or more frequently if events or changes in circumstances indicate that it is more likely than not the asset is impaired.
Assessments of goodwill and indefinite-lived intangible assets We perform our annual review for impairment of goodwill and indefinite-lived intangible assets on April 1 st of each fiscal year, or more frequently if events or changes in circumstances indicate that it is more likely than not the asset is impaired.
The estimated future revenue, royalty rate, and the discount rate are the primary assumptions and estimates used in these valuations. The discount rates used to discount expected future cash flows to present value are generally derived from the weighted average cost of capital analysis and adjusted for the size and/or risk of the asset.
The estimated future revenue, royalty rate, and discount rate are the primary assumptions and estimates used in the valuations. The discount rates used to discount expected future cash flows to present value are generally derived from the weighted average cost of capital analysis and adjusted for the size and/or risk of the asset.
This method assumes 43 that the gaming rights provides the opportunity to develop a casino or historical racing facility in a specified region, and that the present value of the projected cash flows are a result of the realization of advantages contained in these rights.
This method assumes that the gaming rights provides the opportunity to develop a casino or historical racing facility in a specified region, and that the present value of the projected cash flows are a result of the realization of advantages contained in these rights.
The fair values of gaming rights are generally determined using the Greenfield Method, which is an income approach methodology that calculates the present value based on a projected cash flow stream.
The fair values of gaming rights are generally determined using the Greenfield Method, which is an income 44 approach methodology that calculates the present value based on a projected cash flow stream.
We use various valuation methods to determine initial fair value of our indefinite-lived intangible assets, including the Greenfield Method and relief-from-royalty method of the income approach, all of which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.
We use various valuation methods to determine initial fair value of our intangible assets, including the Greenfield Method and relief-from-royalty method of the income approach, all of which use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy.
On April 13, 2022, the Company amended the 2017 Credit Agreement (as amended, the "Credit Agreement") to extend the maturity date of its existing Revolver to April 13, 2027, to increase the commitments under the existing Revolver from $700.0 million to $1.2 billion, and to increase the swing line commitment from $50.0 million to $100.0 million.
On April 13, 2022, the Company amended the Credit Agreement to extend the maturity date of its existing Revolver to April 13, 2027, to increase the commitments under the existing Revolver from $700.0 million to $1.2 billion, and to increase the swing line commitment from $50.0 million to $100.0 million.
If any of these factors were to materially change, such change may require a reevaluation of our goodwill and indefinite-lived intangible assets. Changes in estimates or the application of alternative assumptions could produce significantly different results. 44
If any of these factors were to materially change, such change may require a reevaluation of our goodwill and indefinite-lived intangible assets. Changes in estimates or the application of alternative assumptions could produce significantly different results. 45
Actual as of December 31, 2022 Requirement Interest coverage ratio 6.6 to 1.0 > 2.5 to 1.0 Consolidated total secured net leverage ratio 0.9 to 1.0 The Company was compliant with all applicable covenants on December 31, 2022. 2027 Senior Notes On March 25, 2019, we completed an offering of $600.0 million in aggregate principal amount of 5.50% Senior Unsecured Notes that mature on April 1, 2027 (the "2027 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A that is exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in accordance with Regulation S under the Securities Act.
Actual as of December 31, 2023 Requirement Interest coverage ratio 4.0 to 1.0 > 2.5 to 1.0 Consolidated total secured net leverage ratio 1.1 to 1.0 The Company was compliant with all applicable covenants on December 31, 2023. 2027 Senior Notes On March 25, 2019, we completed an offering of $600.0 million in aggregate principal amount of 5.50% Senior Unsecured Notes that mature on April 1, 2027 (the "2027 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A that is exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in accordance with Regulation S under the Securities Act.
As of December 31, 2022, we had approximately $6.4 million of unrecognized tax benefits. Critical Accounting Policies and Estimates Our significant accounting policies and recently adopted accounting policies are more fully described in Note 2, Significant Accounting Policies of the notes to consolidated financial statements included in Item 8.
As of December 31, 2023, we had approximately $4.8 million of unrecognized tax benefits. Critical Accounting Policies and Estimates Our significant accounting policies and recently adopted accounting policies are more fully described in Note 2, Significant Accounting Policies to the notes to consolidated financial statements included in Item 8.
Our ongoing liquidity will depend on a number of factors, including available cash resources, cash flow from operations, acquisitions or equity investments, funding of construction for development projects, and our compliance with our covenants under our credit facility.
Our ongoing liquidity will depend on several factors, including available cash resources, cash flow from operations, acquisitions, or equity investments, funding of construction for development projects, and our compliance with our covenants under our credit facility.
The following discussion provides an analysis of our results of operations and reasons for material changes therein for 2022 as compared to 2021.
The following discussion provides an analysis of our results of operations and reasons for material changes therein for 2023 as compared to 2022.
Discussion regarding our financial condition and results of operations for 2021 as compared to 2020 is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 23, 2022.
Discussion regarding our financial condition and results of operations for 2022 as compared to 2021 is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 22, 2023.
The Company is required to pay a commitment fee on the unused portion of the Revolver as determined by a pricing grid based on the consolidated total net secured leverage ratio of the Company. For the period ended December 31, 2022, the Company's commitment fee rate was 0.175%.
The Company is required to pay a commitment fee on the unused portion of the Revolver as determined by a pricing grid based on the consolidated total net secured leverage ratio of the Company. For the period ended December 31, 2023, the Company's commitment fee rate was 0.25%.
Gaming rights and trademarks are considered indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our gaming facilities and use the trademarks indefinitely, and our historical experience in renewing these intangible assets at minimal cost with various state gaming commissions.
Certain of our gaming rights and trademarks are considered indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our gaming facilities and use the trademarks indefinitely, and our historical experience in renewing these intangible assets at minimal cost with various state gaming commissions. Our definite-lived intangible assets primarily consist of technology and other assets.
We currently expect our project capital to be approximately $575 to $675 million in 2023, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties.
We currently expect our project capital to be approximately $450.0 to $550.0 million in 2024, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties.
Financing Cash Flow Cash provided by financing activities increased $2.4 billion primarily driven by a $2.3 billion increase in net borrowings from long-term debt and a $0.1 billion decrease in common stock repurchases. Capital Expenditures Included in cash flows from investing activities are capital maintenance expenditures and capital project expenditures.
Financing Cash Flow Cash provided by financing activities decreased $2.3 billion primarily driven by a $2.4 billion decrease in net borrowings from long-term debt and notes payable and a $119.0 million decrease in common stock repurchases. Capital Expenditures Included in cash flows from investing activities are capital maintenance expenditures, and capital project expenditures.
Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business and the operation and development of regional casino gaming properties.
Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties.
Ellis Park Acquisition On September 26, 2022, the Company completed the acquisition of Ellis Park Racing & Gaming ("Ellis Park Transaction"). Ellis Park Racing & Gaming ("Ellis Park") is a racetrack and gaming facility venue with HRMs. As part of the acquisition, the Company also acquired the rights to construct an HRM entertainment venue in Owensboro, Kentucky.
Ellis Park Racing & Gaming ("Ellis Park") is a racetrack and gaming facility venue with HRMs. As part of the acquisition, the Company also acquired the rights to construct an HRM entertainment venue as an annex of Ellis Park.
The dividend was payable on January 6, 2023 to shareholders of record as of the close of business on December 2, 2022. The 7% increase marked the 12th consecutive year that the Company has increased the dividend.
The dividend was payable on January 5, 2024 to shareholders of record as of the close of business on December 1, 2023. The 7% increase marked the thirteenth consecutive year that the Company has increased the dividend per share.
These increases were partially offset by an increase in net interest paid and transaction costs paid as part of the P2E Transaction and other operating expenses. We anticipate that cash flows from operations over the next twelve months will be adequate to fund our business operations and capital expenditures.
These increases were partially offset by an increase in net interest paid and net income taxes paid. We anticipate that cash flows from operations and availability of borrowings under our credit facility over the next twelve months will be adequate to fund our business operations and capital expenditures.
As a result of the updated discount rate to reflect the increased uncertainty of the cash flows and updated projected cash flow stream, the Company recorded a $33.4 million non-cash impairment charge in fourth quarter of 2022 for the Presque Isle gaming rights and trademark.
Based on the 2022 Trigger Event, the Company evaluated and subsequently updated the projected cash flows and discount rate to reflect the economic environment at that time. As a result, the Company recorded a $33.4 million non-cash impairment charge in fourth quarter of 2022 for the Presque Isle gaming rights and trademark.
Adjusted EBITDA excludes: • Transaction expense, net which includes: – Acquisition, disposition, and land sale related charges; – Direct online Sports and Casino business exit costs; and – Other transaction expense, including legal, accounting and other deal-related expense. • Stock-based compensation expense; • Rivers Des Plaines' impact on our investments in unconsolidated affiliates from: 31 – The impact of changes in fair value of interest rate swaps, and – Legal reserves and transaction costs; • Asset impairments; • Gain on Calder land sale; • Legal reserves; • Pre-opening expense; and • Other charges, recoveries and expenses As of December 31, 2021, Arlington International Racecourse ("Arlington") ceased racing and simulcast operations.
Adjusted EBITDA excludes: • Transaction expense, net which includes: – Acquisition, disposition, and property sale related charges; – Direct online Sports and Casino business exit costs; and – Other transaction expense, including legal, accounting and other deal-related expense. • Stock-based compensation expense; • Rivers Des Plaines' impact on our investments in unconsolidated affiliates from: – The impact of changes in fair value of interest rate swaps, and – Legal reserves and transaction costs; • Asset impairments; • Gain on sale of assets; • Legal reserves; • Pre-opening expense; and • Other charges, recoveries, and expenses On June 26, 2023, the Company's management agreement for Lady Luck expired and was not renewed.
The amendment also provides for a senior secured Delayed Draw Term Loan A due April 13, 2027 in the amount of $800.0 million, which was drawn on November 1, 2022 as part of the financing for the P2E Transaction.
The amendment also provided for a senior secured Term Loan A due April 13, 2027 in the amount of $800.0 million, which was drawn on November 1, 2022 as part of the financing for the P2E Transaction. Refer to Note 3, Acquisitions in the accompanying Consolidated Financial Statements for more information regarding the P2E Transaction.
Based on the Company's evaluation, the Company concluded that a trigger event for impairment testing occurred related to the Presque Isle Downs and Casino ("Presque Isle") gaming rights, trademark, and the reporting unit's goodwill due to continued negative economic conditions that negatively impacted the estimates and assumptions utilized in our indefinite-lived intangible asset impairment assessment.
Based on the Company's evaluation, the Company concluded that a trigger event for impairment testing occurred related to the Presque Isle gaming rights, trademark, and the reporting unit's goodwill due to negative economic conditions ("2022 Trigger Event").
For more regarding the Chasers, Ellis Park and P2E Transactions, refer to Note 3, Acquisitions, to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
For additional information, refer to Note 10, Shareholders' Equity to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
On February 15, 2023, the Company closed on the sale of the property to the Chicago Bears. For more information, refer to Note 4, Dispositions and Assets Held for Sale, to the notes to consolidated financial statements included in this Annual Report on Form 10-K.
For more information, refer to Note 4, Dispositions, to the notes to consolidated financial statements included in this Annual Report on Form 10-K.
The Exacta Transaction will provide the Company the ability to realize synergies related to the Company's recent acquisition of the HRM entertainment venues in Virginia. 30 Other Business Activities Impairment During the quarter ended December 31, 2022, the Company evaluated whether events or circumstances changed that would indicate it is more likely than not that any of the Company's intangible assets, goodwill, or property and equipment, were impaired.
During the quarter ended December 31, 2022, the Company evaluated whether events or circumstances changed that would indicate it is more likely than not that any of the Company's intangible assets, goodwill, or property and equipment, were impaired.
Business, of this Annual Report on Form 10-K for more information on our segments and a description of our competition and government regulations and potential legislative changes that affect our business.
Our Operations We manage our operations through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming. Refer to Part I, Item 1. Business, of this Annual Report on Form 10-K for more information on our segments and a description of our competition and government regulations and potential legislative changes that affect our business.
Arlington's operating loss in the current quarter and year is treated as an adjustment to EBITDA and is included in Other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA. For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the Consolidated Statements of Comprehensive Income (Loss).
Arlington's results and exit costs in 2022 and 2023 are treated as an adjustment to EBITDA. 33 For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the Consolidated Statements of Comprehensive Income. See the Reconciliation of Comprehensive Income to Adjusted EBITDA included in this section for additional information.
The Company is in the process of transitioning its financing from LIBOR to alternative reference rates. These transition activities are not expected to have a material impact on the Company’s financial statements. The Credit Agreement is collateralized by substantially all the wholly-owned assets of the Company.
The Company completed the transition of its financing from London Interbank Offered Rate to SOFR during the second quarter of 2023. These transition activities did not have a material impact on the Company’s financial statements. The Credit Agreement is collateralized by substantially all the wholly owned assets of the Company.
Financial Statements and Supplementary Data of this Annual Report on Form 10-K. 2022 Transactions Peninsula Pacific Entertainment Acquisition On November 1, 2022, the Company completed the acquisition of substantially all the ass ets of Peninsula Pacific Entertainment, LLC ("P2E") with a base purchase price of $2.75 billion ("P2E Transaction") subject to working capital and other purchase price adjustments.
The Company completed the sale of substantially all its assets at Lady Luck for an immaterial amount. 2022 Transactions Peninsula Pacific Entertainment Acquisition On November 1, 2022, the Company completed the acquisition of substantially all the assets of P2E with a base purchase price of $2.75 billion ("P2E Transaction") subject to working capital and other purchase price adjustments.
The Issuer may redeem some of or all the 2030 Senior Notes at any time prior to April 1, 2025, at redemption prices set forth in the 2030 Offering Memorandum. 42 Contractual Obligations Our commitments to make future payments as of December 31, 2022, are estimated as follows: (in millions) 2023 2024-2025 2026-2027 Thereafter Total Dividends $ 27.0 $ — $ — $ — $ 27.0 Term Loan B 4.0 376.0 — — 380.0 Interest on Term Loan B (1) 22.1 21.7 — — 43.8 Revolver — — 664.1 — 664.1 Interest on Revolver (1) 38.3 76.6 49.2 — 164.1 Term Loan B-1 3.0 6.0 6.0 279.8 294.8 Interest on Term Loan B-1 (1) 17.2 33.9 33.1 3.5 87.7 Term Loan A 40.0 80.0 680.0 — 800.0 Interest on Term Loan A (1) 45.9 84.9 49.4 — 180.2 2027 Senior Notes — — 600.0 — 600.0 2028 Senior Notes — — — 700.0 700.0 2030 Senior Notes — — — 1,200.0 1,200.0 Interest on 2027 Senior Notes 33.0 66.0 49.5 — 148.5 Interest on 2028 Senior Notes 33.3 66.5 66.5 16.6 182.9 Interest on 2030 Senior Notes 69.0 138.0 138.0 175.0 520.0 Operating and Finance Leases 8.9 16.5 12.0 22.0 59.4 All other 2.5 5.2 5.0 11.6 24.3 Total $ 344.2 $ 971.3 $ 2,352.8 $ 2,408.5 $ 6,076.8 (1) Interest includes the estimated contractual payments under our Credit Facility assuming no change in the weighted average borrowing rate of 5.77%, which was the rate in place as of December 31, 2022.
The Company may redeem some or all of the 2031 Senior Notes at any time prior to April 25, 2025, at redemption prices set forth in the 2031 Offering Memorandum. 43 Contractual Obligations Our commitments to make future payments as of December 31, 2023, are estimated as follows: (in millions) 2024 2025-2026 2027-2028 Thereafter Total Dividends $ 28.5 $ — $ — $ — $ 28.5 Revolver — — 247.2 — 247.2 Interest on Revolver (1) 17.4 34.8 4.9 — 57.1 Term Loan B-1 3.0 6.0 282.8 — 291.8 Interest on Term Loan B-1 (1) 22.0 43.3 25.8 — 91.1 Term Loan A 65.0 130.0 1,040.0 — 1,235.0 Interest on Term Loan A (1) 85.7 157.1 20.7 — 263.5 2027 Senior Notes — — 600.0 — 600.0 2028 Senior Notes — — 700.0 — 700.0 2030 Senior Notes — — — 1,200.0 1,200.0 2031 Senior Notes — — — 600.0 600.0 Interest on 2027 Senior Notes 33.0 66.0 16.5 — 115.5 Interest on 2028 Senior Notes 33.3 66.5 49.9 — 149.7 Interest on 2030 Senior Notes 69.0 138.0 138.0 106.0 451.0 Interest on 2031 Senior Notes 40.5 81.0 81.0 101.3 303.8 Operating and Finance Leases 10.3 19.5 14.5 37.0 81.3 All other 1.6 3.1 2.9 6.5 14.1 Total $ 409.3 $ 745.3 $ 3,224.2 $ 2,050.8 $ 6,429.6 (1) Interest includes the estimated contractual payments under our Credit Facility assuming no change in the weighted average borrowing rate of 7.05%, which was the rate in place as of December 31, 2023.
The following table is a summary of our liquidity and cash flows: Year Ended December 31, Change (in billions) 2022 2021 Cash Flows from: Operating activities $ 0.5 $ 0.5 $ — Investing activities (3.1) (0.1) (3.0) Financing activities 2.4 — 2.4 Operating Cash Flow Cash provided by operating activities increased from increased operating income, increased distributions from unconsolidated affiliates, and tax refunds in the current year driven by prior years' tax return losses.
The following table is a summary of our liquidity and cash flows: Year Ended December 31, Change (in billions) 2023 2022 Cash Flows from: Operating activities $ 0.6 $ 0.5 $ 0.1 Investing activities (0.7) (3.1) 2.4 Financing activities 0.1 2.4 (2.3) Operating Cash Flow Cash flows provided by operating activities increased $0.1 billion driven by increased operating income and increased deferred revenue from advanced ticket sales and sponsorships related to the 150 th Kentucky Derby .
Repurchases may be made at management’s discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time.
Common Stock Repurchase Program On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million ("2021 Stock Repurchase Program"). Repurchases may be made at management’s discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions.
Upon completion of this offering, the aggregate principal amount outstanding of the Existing 2028 Notes, together with the Additional 2028 Notes (collectively, the "2028 Senior Notes"), is $700.0 million.
In connection with the offering, we capitalized $3.4 million of debt issuance costs which are being amortized as interest expense over the term of the Additional 2028 Notes. Upon completion of this offering, the aggregate principal amount outstanding of the Existing 2028 Notes, together with the Additional 2028 Notes (collectively, the "2028 Senior Notes"), is $700.0 million.
Calder Land Sale On June 17, 2022, the Company closed on the sale of 115.7 acres of land near Calder Casino ("Calder") for $291.0 million to Link Logistics Real Estate, a Blackstone portfolio company. The Company received cash proceeds of $279.0 million which was net of $12.0 million of transaction costs.
The Company plans to develop an expanded charitable gaming facility in Salem to accommodate HRMs and table games. Calder Land Sale On June 17, 2022, the Company closed on the sale of 115.7 acres of land near Calder Casino for $291.0 million to Link Logistics Real Estate, a Blackstone portfolio company.
Offsetting these increases in net income were a $17.8 million non-cash after-tax increase in asset impairments; a $35.5 million after-tax increase in transaction, pre-opening and other expenses, net, a $2.8 million after-tax increase in legal reserves, and $0.7 million of other charges.
Offsetting these decreases to net income were a $16.6 million after-tax decrease in transaction, pre-opening and other expenses, a $10.1 million after-tax decrease in non-cash asset impairments, and a $3.1 million decrease of other charges.
Credit Facilities and Indebtedness The following table presents our debt outstanding, bond premium and debt issuance costs: As of December 31, Change (in millions) 2022 2021 Term Loan B due 2024 $ 380.0 $ 384.0 $ (4.0) Term Loan B-1 due 2028 294.7 297.8 (3.1) Term Loan A due 2027 800.0 — 800.0 Revolver 664.1 — 664.1 2027 Senior Notes 600.0 600.0 — 2028 Senior Notes 700.0 700.0 — 2030 Senior Notes 1,200.0 — 1,200.0 Total debt 4,638.8 1,981.8 2,657.0 Current maturities of long-term debt 47.0 7.0 40.0 Total debt, net of current maturities 4,591.8 1,974.8 2,617.0 Issuance cost and fees (33.1) (13.8) (19.3) Total debt $ 4,558.7 $ 1,961.0 $ 2,597.7 Credit Agreement On December 27, 2017, we entered into a senior secured credit agreement ("2017 Credit Agreement") with a syndicate of lenders.
Credit Facilities and Indebtedness The following table presents our debt outstanding, bond premium and debt issuance costs: As of December 31, Change (in millions) 2023 2022 Term Loan B due 2024 $ — $ 380.0 $ (380.0) Term Loan B-1 due 2028 291.8 294.7 (2.9) Term Loan A due 2027 1,235.0 800.0 435.0 Revolver 247.2 664.1 (416.9) 2027 Senior Notes 600.0 600.0 — 2028 Senior Notes 700.0 700.0 — 2030 Senior Notes 1,200.0 1,200.0 — 2031 Senior Notes 600.0 — 600.0 Total debt 4,874.0 4,638.8 235.2 Current maturities of long-term debt (68.0) (47.0) (21.0) Total debt, net of current maturities 4,806.0 4,591.8 214.2 Issuance cost and fees (37.7) (33.1) (4.6) Total debt $ 4,768.3 $ 4,558.7 $ 209.6 Credit Agreement At December 31, 2023, the Company’s senior secured credit facility (as amended from time to time, the “Credit Agreement") consisted of a $1.2 billion revolving credit facility (the "Revolver"), $300.0 million senior secured term loan B-1 due 2028 (the "Term Loan B-1"), $1.3 billion senior secured term loan A due 2027 (the "Term Loan A"), and $100.0 million swing line commitment.
The 2027 Senior Notes were issued at par, with interest payable on April 1 st and October 1 st of each year, commencing on October 1, 2019. The 2027 Senior Notes were issued pursuant to an indenture, dated March 25, 2019 (the "2027 Indenture"), among the Company, certain subsidiaries of the Company as guarantors (the "2027 Guarantors"), and U.S.
The 2027 Senior Notes were issued at par, with interest payable on April 1 st and October 1 st of each year, commencing on October 1, 2019. T he 2027 Senior Notes will vote as one class under the indenture governing the 2027 Senior Notes.
The terms of the 2027 Indenture, among other things, limit the ability of the Company to: (i) incur additional debt and issue preferred stock, (ii) pay dividends or make other restricted payments, (iii) make certain investments, (iv) create liens, (v) allow restrictions on the ability of certain of our subsidiaries to pay dividends or make other payments, (vi) sell assets, (vii) merge or consolidate with other entities, and (viii) enter into transactions with affiliates. 2028 Senior Notes On December 27, 2017, we completed an offering of $500.0 million in aggregate principal amount of 4.75% Senior Unsecured Notes that mature on January 15, 2028 (the "Existing 2028 Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A that is exempt from registration under the Securities Act, and to certain non-U.S. persons in accordance with Regulation S under the Securities Act.
The Company may redeem some or all of the 2027 Senior Notes at redemption prices set forth in the 2027 Indenture. 2028 Senior Notes On December 27, 2017, we completed an offering of $500.0 million in aggregate principal amount of 4.75% Senior Unsecured Notes that mature on January 15, 2028 (the "Existing 2028 Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A that is exempt from registration under the Securities Act, and to certain non-U.S. persons in accordance with Regulation S under the Securities Act.
The terms of the 2028 Indenture, among other things, limit the ability of the Company to: (i) incur additional debt and issue preferred stock, (ii) pay dividends or make other restricted payments, (iii) make certain investments, (iv) create liens, (v) allow restrictions on the ability of certain of our subsidiaries to pay dividends or make other payments, (vi) sell assets, (vii) merge or consolidate with other entities, and (viii) enter into transactions with affiliates. 2030 Senior Notes On April 13, 2022, a wholly-owned subsidiary of the Company completed an offering of $1.2 billion in aggregate principal amount of 5.75% Senior Unsecured Notes that mature on April 13, 2030 (the "2030 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A that was exempt from registration under the Securities Act, and to certain non-U.S. persons in accordance with Regulation S under the Securities Act.
The Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the 2028 Indenture. 42 2030 Senior Notes On April 13, 2022, a wholly owned subsidiary of the Company completed an offering of $1.2 billion in aggregate principal amount of 5.75% Senior Unsecured Notes that mature on April 13, 2030 (the "2030 Senior Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A that was exempt from registration under the Securities Act, and to certain non-U.S. persons in accordance with Regulation S under the Securities Act.
The Term Loan B-1 bears interest at LIBOR plus 200 basis points and requires quarterly payments of 0.25% of the original $300.0 million balance. The Term Loan B-1 may be subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the 2017 Credit Agreement.
The Term Loan B-1 may be subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the Credit Agreement. The Revolver and Term Loan A bear interest at SOFR plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio.
Consolidated Financial Results The following table reflects our net revenue, operating income, net income, Adjusted EBITDA, and certain other financial information: Years Ended December 31, Change (in millions) 2022 2021 Net revenue $ 1,809.8 $ 1,597.2 $ 212.6 Operating income 321.8 284.4 37.4 Operating income margin 17.8 % 17.8 % Net income from continuing operations $ 439.4 $ 249.1 $ 190.3 Adjusted EBITDA 763.6 627.0 136.6 Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 • Net revenue increased $212.6 million driven by a $205.5 million increase from Live and Historical Racing primarily due to revenue attributable to the Virginia properties acquired in the P2E, Ellis Park and Chasers Transactions, the running of the 2022 Kentucky Derby without capacity restrictions that were in place in 2021, and continued growth at our Oak Grove property and at Derby City Gaming and a $60.5 million increase from Gaming primarily due to our New York and Iowa properties acquired in the P2E Transaction and increased revenue in Maine, Florida, and Maryland as a result of certain capacity restrictions during the first half of 2021 that did not recur.
Consolidated Financial Results The following table reflects our net revenue, operating income, net income, Adjusted EBITDA, and certain other financial information: Years Ended December 31, Change (in millions) 2023 2022 Net revenue $ 2,461.7 $ 1,809.8 $ 651.9 Operating income 564.0 321.8 242.2 Operating income margin 22.9 % 17.8 % Net income $ 417.3 $ 439.4 $ (22.1) Adjusted EBITDA 1,023.9 763.6 260.3 Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 • Net revenue increased $651.9 million driven by a $432.7 million increase in Live and Historical Racing revenue primarily attributable to the Virginia properties acquired in the P2E Transaction, the opening of Turfway Park in Northern Kentucky in September 2022, a record-breaking Derby Week at Churchill Downs Racetrack, the properties acquired in the Ellis Park and Chasers Transactions, and continued growth at our other Kentucky properties, a $212.7 35 million increase in Gaming revenue primarily due to our New York and Iowa properties acquired in the P2E Transaction, and an $8.5 million increase in TwinSpires revenue primarily attributable to the Exacta Transaction, partially offset by a $2.0 million decrease in All Other revenue. • Operating income increased $242.2 million due to a $171.4 million increase in Live and Historical Racing income primarily attributable to the Virginia properties acquired in the P2E Transaction, the opening of Turfway Park in Northern Kentucky in September 2022, the properties acquired in the Ellis Park and Chasers Transactions, and continued growth at our other Kentucky properties, a $50.6 million increase in Gaming income primarily from the New York and Iowa properties acquired in the P2E Transaction, a $13.9 million increase in TwinSpires income primarily due to the exit of the direct online Sports and Casino business in the first quarter of 2022 and an increase attributable to the Exacta Transaction, a $37.3 million decrease in transaction costs, and a $13.7 million decrease in non-cash impairment costs.
The 3.25% premium is being amortized through interest expense, net over the term of the Additional 2028 Notes. The Company used the net proceeds from the Additional 2028 Notes and the Term Loan B-1: (i) to repay indebtedness outstanding under our Revolver, (ii) to fund related transaction fees and expenses, and (iii) for working capital and other general corporate purposes.
The Company used a portion of the net proceeds from the offering to repay indebtedness outstanding under its Term Loan B Facility due 2024 and to fund related transaction fees and expenses, working capital, and other general corporate purposes.
The Company’s five-year total shareholder return for 2022 was 178% compared to 55% for the Russell 1000 and 57% for the S&P 500. The preceding shareholder return calculations assume dividends are reinvested. 33 We remain committed to delivering strong financial results and long-term sustainable growth.
The Company’s total shareholder return was 28% for 2023 compared to 26.5% for the Russell 1000 and 26.3% for the S&P 500. The Company’s five-year total shareholder return for 2023 was 237% compared to 106% for the Russell 1000 and 107% for the S&P 500. The preceding shareholder return calculations assume dividends are reinvested.
For additional information, refer to Note 2 1 - Segment Information, to the notes to consolidated financial statements included in Item 8.
For additional information, refer to Note 8, Asset Impairments to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
We had $270.2 million of repurchase authority remaining under this program on December 31, 2022. 39 Dividends On October 25, 2022, the Company's Board of Directors approved an annual cash dividend on our common stock of $0.714 per outstanding share, which represented a 7% increase over the prior year.
The repurchase of the shares was funded using available cash and borrowings under the Company’s senior secured credit facility. Dividends On October 24, 2023, the Company's Board of Directors approved an annual cash dividend on our common stock of $0.382 per outstanding share, which represented a 7% increase over the prior year on a split adjusted basis.
We have announced several project capital investments, including the following: Churchill Downs Racetrack First Turn Experience and the Paddock Project, the Derby City Gaming Expansion and Hotel, Derby City Gaming Downtown, the Ellis Park HRM facility in Owensboro, Kentucky, the Terre Haute Casino Resort, a New Hampshire HRM Facility, the Virginia HRM entertainment venues in Dumfries and Emporia, and HRMs in our Louisiana OTBs.
We have spent $599.5 million in 2023 on project capital investments including: Churchill Downs Racetrack Paddock Project, Derby City Gaming Downtown, Owensboro Racing & Gaming in Eastern Daviess County, Kentucky, the Terre Haute Casino Resort in Vigo County, Indiana, a New Hampshire HRM Facility, and The Rose Gaming Resort in Dumfries.
Year Ended December 31, Change (in millions) 2022 2021 Live and Historical Racing $ 287.5 $ 175.0 $ 112.5 TwinSpires 114.1 82.7 31.4 Gaming 421.9 411.9 10.0 Total segment Adjusted EBITDA 823.5 669.6 153.9 All Other (59.9) (42.6) (17.3) Total Adjusted EBITDA $ 763.6 $ 627.0 $ 136.6 Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 • Live and Historical Racing Adjusted EBITDA increased $112.5 million due to a $30.1 million increase attributable to the Virginia properties acquired in the P2E Transaction, a $0.7 million increase attributable to properties acquired in the Ellis Park and Chasers Transactions, a $59.1 million increase at Churchill Downs Racetrack primarily due to the running of the 2022 Kentucky Derby without capacity restrictions that were in place in 2021, and a $22.6 million increase primarily due to the continued growth at our Oak Grove property and at Derby City Gaming. • TwinSpires Adjusted EBITDA increased $31.4 million primarily due to a $40.0 million increase from our Sports and Casino business primarily due to decreased marketing and promotional activities and an $8.6 million decrease attributable to lower Horse Racing net revenue. • Gaming Adjusted EBITDA increased $10.0 million driven by a $17.9 million increase in New York and Iowa from the properties acquired as part of the P2E Transaction, an $11.6 million increase primarily from our properties in Maine, Florida, and Louisiana as a result of capacity restrictions in 2021 that did not recur, and a $2.8 million increase from our equity investments.
Year Ended December 31, Change (in millions) 2023 2022 Live and Historical Racing $ 475.4 $ 287.5 $ 187.9 TwinSpires 132.1 114.1 18.0 Gaming 488.6 421.9 66.7 Total segment Adjusted EBITDA 1,096.1 823.5 272.6 All Other (72.2) (59.9) (12.3) Total Adjusted EBITDA $ 1,023.9 $ 763.6 $ 260.3 Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 • Live and Historical Racing Adjusted EBITDA increased $187.9 million driven by a $145.0 million increase attributable to the Virginia properties acquired in the P2E Transaction and savings as a result of the Exacta Transaction, a $15.7 million increase due to a record-breaking Derby Week at Churchill Downs Racetrack, a $13.1 million increase from continued growth at Oak Grove in Southwestern Kentucky, an $8.6 million increase in Northern Kentucky primarily due to the opening of Turfway Park in September 2022, a $7.2 million increase due to growth from our Derby City Gaming property and the opening of Derby City Gaming Downtown in December 2023 in Louisville, Kentucky, and a $5.4 million increase attributable to our other Live and Historical Racing properties.
Revenue by Segment The following table presents net revenue for our segments, including intercompany revenues: Years Ended December 31, Change (in millions) 2022 2021 Live and Historical Racing $ 646.4 $ 430.6 $ 215.8 TwinSpires 441.6 457.8 (16.2) Gaming 761.8 698.4 63.4 All Other 3.3 49.2 (45.9) Eliminations (43.3) (38.8) (4.5) Net Revenue $ 1,809.8 $ 1,597.2 $ 212.6 Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 • Live and Historical Racing revenue for 2022 increased $215.8 million primarily due to $62.4 million in revenue attributable to the Virginia properties acquired in the P2E Transaction, $8.0 million in revenue attributable to properties acquired in the Ellis Park and Chasers Transactions, $77.6 million increased revenue at Churchill Downs Racetrack primarily due to the running of the 2022 Kentucky Derby without capacity restrictions that were in place in 2021, and $67.8 million increase driven primarily by growth at our Oak Grove property and Derby City Gaming as well as the opening of Turfway Park in September 2022. • TwinSpires revenue decreased $16.2 million primarily due to a decrease in pari-mutuel handle as a higher portion of our patrons returned to wagering at brick-and-mortar facilities instead of wagering online and the decision to exit the direct online Sports and Casino business in the first quarter of 2022. • Gaming revenue increased $63.4 million primarily due to $46.5 million attributable to our New York and Iowa properties acquired in the P2E Transaction, $25.5 million in Maine, Florida, and Maryland as a result of certain capacity restrictions during the first half of 2021 and a $9.7 million increase in Louisiana as a result of the 2022 Jazz Festival that was not held in the prior year due to COVID-19 and shutdowns in 2021 due to Hurricane Ida that did not recur.
Revenue by Segment The following table presents net revenue for our segments, including intercompany revenues: Years Ended December 31, Change (in millions) 2023 2022 Live and Historical Racing $ 1,084.6 $ 646.4 $ 438.2 TwinSpires 458.4 441.6 16.8 Gaming 974.6 761.8 212.8 All Other 0.9 3.3 (2.4) Eliminations (56.8) (43.3) (13.5) Net Revenue $ 2,461.7 $ 1,809.8 $ 651.9 Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 • Live and Historical Racing revenue increased $438.2 million driven by a $313.9 million increase attributable to the Virginia properties acquired in the P2E Transaction, a $41.2 million increase in Northern Kentucky primarily due to the opening of Turfway Park in September 2022, a $36.4 million increase attributable to properties acquired in the Ellis Park and Chasers Transactions, a $20.7 million increase due to a record-breaking Derby Week at Churchill Downs Racetrack, a $19.2 million increase from our Derby City Gaming property and the opening of Derby City Gaming Downtown in December 2023 in Louisville, Kentucky, and a $16.5 million increase from our Oak Grove property in Southwestern Kentucky.
Excluding these items, net income increased $41.8 million primarily due to a $63.5 million after-tax increase driven by the results of our operations and equity in income from our unconsolidated affiliates, partially offset by a $21.7 million after-tax increase in interest expense associated with higher outstanding debt balances. • Adjusted EBITDA increased $136.6 million driven by a $112.5 million increase from Live and Historical Racing primarily due to an increase attributable to the Virginia properties acquired in the P2E, Ellis Park and Chasers Transactions, an increase due to the running of the 2022 Kentucky Derby without capacity restrictions that were in place in 2021, and continued growth at our Oak Grove property and at Derby City Gaming, a $31.4 million increase from TwinSpires primarily due to a decrease in marketing spend as a result of exiting the Sports and Casino business, and a $10.0 million increase from Gaming driven by an increase in New York and Iowa from the properties acquired 34 as part of the P2E Transaction and an increase primarily from our properties in Maine, Florida, and Louisiana as a result of capacity restrictions in 2021 that did not recur.
Excluding these items, net income increased $69.7 million due to a $197.1 million after-tax increase primarily driven by the results of our operations, partially offset by a $127.4 million after-tax increase in interest expense associated with higher outstanding debt balances. • Adjusted EBITDA increased $260.3 million driven by a $187.9 million increase in Live and Historical Racing Adjusted EBITDA primarily attributable to the Virginia properties acquired in the P2E Transaction, a record-breaking Derby Week at Churchill Downs Racetrack, and continued growth at our other Kentucky properties, a $66.7 million increase in Gaming Adjusted EBITDA primarily from the New York and Iowa properties acquired in the P2E Transaction, and an $18.0 million increase in TwinSpires Adjusted EBITDA primarily due to the exit of the direct online Sports and Casino business and an increase attributable to the Exacta Transaction, partially offset by a $12.3 million increase in corporate general administrative expenses.
Based on the Company’s evaluation, the Company recorded a $4.9 million non-cash impairment charge related to certain assets in the TwinSpires segment.
Based on the Company’s evaluation, the Company recorded a $4.9 million non-cash impairment charge related to certain assets in the TwinSpires segment. As of December 31, 2023, the Company has exited every state for the direct online Sports and Casino business. The Company will maintain its retail sports betting operations and has monetized four of its online market access licenses.
The following items impacted comparability of the Company's net income from continuing operations for the year ended December 31, 2022 compared to the prior year: a $198.7 million non-cash after tax gain on the sale of Calder assets and a $6.5 million after tax decrease in expense related to Rivers Des Plaines' legal reserves and transaction costs.
The following items impacted comparability of the Company's net income for the year ended December 31, 2023 compared to the prior year: a $112.4 million decrease in after-tax gains on property sales and a $9.2 million after-tax benefit related to our equity portion of the non-cash change in the fair value of Rivers Des Plaines' interest rate swap that did not recur in 2023.
We delivered strong growth in net revenue, operating income, net income, and Adjusted EBITDA compared to fiscal year 2021: • Net revenue was $1.8 billion, up $212.6 million or 13%; • Net income was $439.4 million, up $190.3 million or 76%; • Adjusted EBITDA was $763.6 million, up $136.6 million, or 22%; and • Cash from continuing operations was $510.8 million, up $51.3 million or 11%.
We delivered strong growth in net revenue, operating income, and Adjusted EBITDA compared to fiscal year 2022: • Net revenue was $2.5 billion, up $651.9 million or 36%. • Operating income was $564.0 million, up $242.2 million or 75%. • Net income was $417.3 million, down $22.1 million or 5%. • Adjusted EBITDA was $1.0 billion, up $260.3 million, or 34%.
Investing Cash Flow Cash used in investing activities increased $3.0 billion driven primarily by $3.0 billion used for the P2E, Ellis Park and Chasers Transactions, increased capital maintenance expenditures of $0.3 billion, partially offset by proceeds from the Calder land sale of $0.3 billion.
Investing Cash Flow Cash used in investing activities decreased $2.4 billion driven by the P2E Transaction in 2022, partially offset by increased capital project expenditures in 2023 primarily at Churchill Downs Racetrack, Terre Haute Casino Resort, and The Rose Gaming Resort in Dumfries, Virginia, and decreased proceeds from the sale of assets.
Partially offsetting these increases were a $34.2 million increase in transaction expense driven by the P2E Transaction, a $25.7 million increase in selling, general and administrative expenses due to an increase in Corporate compensation related expenses, legal fees, and charitable donations, a $23.0 million increase in asset impairments, a decrease of $9.3 million in All Other due to Arlington not conducting live racing in 2022, and a $1.1 million decrease in Gaming. • Net income from continuing operations increased $190.3 million.
These increases were partially offset by a $38.1 million increase in selling, general and administrative expenses primarily due to the P2E Transaction, and a $6.6 million decrease in All Other operating income primarily related to Arlington exit costs. • Net income from decreased $22.1 million.
Live and Historical Racing Segment: • Adjusted EBITDA was $287.5 million, up $112.5 million or 64% from fiscal year 2021. • Churchill Downs Racetrack: ▪ Derby Week successfully returned to full capacity at Churchill Downs Racetrack with the 148th Kentucky Derby with over 147,000 fans gathered in person to watch the most exciting two minutes in sports on the first Saturday in May. ▪ We successfully completed the Homestretch Club prior to the 148th Kentucky Derby and approximately $8.0 million under budget. ▪ We continued construction on the new First Turn Experience which will be completed for the 149th Kentucky Derby in May 2023 and the Paddock Project for the 150th Kentucky Derby in May 2024. ▪ We extended the partnership with Woodford Reserve as the Presenting Sponsor for the Kentucky Derby through 2027. • Derby City Gaming delivered record net revenue and Adjusted EBITDA.
Live and Historical Racing Segment: • Adjusted EBITDA was $475.4 million, up $187.9 million or 65% from fiscal year 2022. • Churchill Downs Racetrack: ◦ Churchill Downs Racetrack ran the 149 th Kentucky Derby with record Derby Week all-sources handle and record Derby Week contribution to Adjusted EBITDA with over 150,000 fans gathered in person to watch the most exciting two minutes in sports on the first Saturday in May. ◦ We successfully completed the First Turn Experience prior to the 149 th Kentucky Derby. ◦ We continued construction of the Paddock Project which is scheduled to be finished in time for the 150 th Kentucky Derby the first weekend in May 2024. • Kentucky HRMs : ◦ Derby City Gaming: Delivered record net revenue and Adjusted EBITDA and completed the expansion of the gaming floor and opened a new hotel. ◦ Derby City Gaming Downtown : Opened in Louisville, Kentucky, on December 6, 2023. ◦ Oak Grove: Delivered record net revenue and Adjusted EBITDA for a second year in a row. ◦ Owensboro: Announced plans to invest approximately $100 million in a new HRM entertainment venue on the east side of Owensboro with an expected completion in the first quarter of 2025. • Virginia HRMs: ◦ Southern Virginia - Rosie's Gaming Emporium: Opened in Emporia, Virginia on September 26, 2023. ◦ Northern Virginia - The Rose Gaming Resort (Dumfries): We continued construction of a $460 million gaming and entertainment resort and hotel in Dumfries, Virginia with a scheduled completion late in the third quarter of 2024.
As of December 31, 2022, that applicable margin was 125 basis points which was based on the pricing grid in the Credit Agreement. During 2022, we have borrowed $664.1 million on our Revolver which provided the Company with financing for the Chasers, Ellis Park, and P2E Transactions.
As of December 31, 2023, that applicable margin was 150 basis points which 41 was based on the pricing grid in the Credit Agreement. The Company had $947.6 million available borrowing capacity, after consideration of $5.3 million in outstanding letters of credit, under the Revolver as of December 31, 2023.
Our businesses generate strong cash flow and we have a solid balance sheet that supports our organic growth as well as strategic acquisitions that we believe will create long-term value for our shareholders. Our Operations We manage our operations through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming. Refer to Part I, Item 1.
We delivered strong financial results in 2023 and remain committed to driving long-term sustainable growth. Our company generates strong cash flow and our balance sheet is solid and able to support our organic growth and strategic acquisitions that we believe will create long-term value for our shareholders.
Partially offsetting these increases was a decrease of $18.3 million primarily from our Mississippi and Pennsylvania properties due to the current economic conditions. • All Other revenue decreased $45.9 million primarily as a result of Arlington ceasing racing and simulcast operations at the end of 2021. 35 Consolidated Operating Expense The following table is a summary of our consolidated operating expense: Years Ended December 31, Change (in millions) 2022 2021 Taxes and purses $ 473.7 $ 434.5 $ 39.2 Content expense 173.7 182.6 (8.9) Salaries and benefits 196.0 170.3 25.7 Selling, general and administrative expense 164.2 138.5 25.7 Depreciation and amortization 113.7 103.2 10.5 Marketing and advertising expense 52.9 74.5 (21.6) Asset impairments 38.3 15.3 23.0 Transaction expense 42.1 7.9 34.2 Other operating expense 233.4 186.0 47.4 Total expense $ 1,488.0 $ 1,312.8 $ 175.2 Percent of revenue 82 % 82 % Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 Significant items affecting comparability of consolidated operating expense include: • The additional properties acquired as part of the P2E, Ellis Park and Chasers Transactions drove increases in taxes and purses, salaries and benefits, selling, general and administrative and other operating expenses. • In May 2022, we ran the Kentucky Derby without capacity restrictions which drove increases in salaries and benefits and other operating expenses. • In addition to the impacts from the acquisitions, Corporate compensation related expenses, legal fees, and charitable donations also contributed to increases in selling, general and administrative expenses. • The decline of $21.6 million in marketing and advertising expense was primarily due to decreased online marketing by our TwinSpires Sports and Casino business due to the decision to exit the direct online Sports and Casino business.
Consolidated Operating Expense The following table is a summary of our consolidated operating expense: Years Ended December 31, Change (in millions) 2023 2022 Gaming taxes and purses $ 613.4 $ 473.7 $ 139.7 Content expense 173.0 173.7 (0.7) Salaries and benefits 285.3 196.0 89.3 Selling, general and administrative expense 202.3 164.2 38.1 Depreciation and amortization 169.0 113.7 55.3 Marketing and advertising expense 83.4 52.9 30.5 Maintenance, insurance and utilities 88.9 61.5 27.4 Property and other taxes 26.4 16.0 10.4 Asset impairments 24.6 38.3 (13.7) Transaction expense 4.8 42.1 (37.3) Other operating expense 226.6 155.9 70.7 Total expense $ 1,897.7 $ 1,488.0 $ 409.7 Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Significant items affecting comparability of consolidated operating expense include: • Taxes and purses, salaries and benefits, selling, general and administrative, marketing and advertising, depreciation and amortization, maintenance, insurance and utilities, property and other taxes, and other operating expenses increased due to the P2E, Ellis Park, Chasers, and Exacta Transactions, as well as the opening of Turfway Park in September of 2022. • The decrease in asset impairments was driven by reduced non-cash impairment charges in 2023 compared to 2022 primarily at Presque Isle. • Transaction expenses decreased $37.3 million primarily driven by expenses incurred in 2022 in connection with the P2E Transaction. 37 Adjusted EBITDA by Segment We believe that the use of Adjusted EBITDA as a key performance measure of the results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner.
For more information regarding the P2E Transaction, refer to Note 3, Acquisitions, to the notes to consolidated financial statements included in Item 8.
The offering of the 2030 Senior Notes was part of the financing utilized for the P2E Transaction. For additional information on these transactions, refer to Note 12, Debt to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
We will continue to monitor for new developments related to the pandemic and assess these developments to maintain continuity in our operations. Key Indicators to Evaluate Business Results and Financial Condition Our management monitors a variety of key indicators to evaluate our business results and financial condition.
The transaction is subject to usual and customary closing conditions, including applicable regulatory notices and approvals and is expected to close in the first half of 2024. Key Indicators to Evaluate Business Results and Financial Condition Our management monitors a variety of key indicators to evaluate our business results and financial condition.
We continued construction of the gaming floor expansion and new five-story hotel. • Oak Grove delivered record net revenue and Adjusted EBITDA. • We celebrated the opening of the new HRM entertainment venue and racetrack facility at Turfway Park in September 2022. • We began construction of Derby City Gaming Downtown in Louisville, Kentucky as a new HRM entertainment venue. • We completed the acquisition of Chasers in Salem, New Hampshire on September 2, 2022, which will enable the Company to expand its HRM strategy with table games to the New England market. • We completed the acquisition of Ellis Park in Henderson, Kentucky in September 2022 including the rights to build an HRM entertainment venue in Owensboro, Kentucky. 32 TwinSpires Segment: • Adjusted EBITDA was $114.1 million, up $31.4 million or 38% from fiscal year 2021. • We announced a multi-year agreement with FanDuel to enable FanDuel to create a fully integrated and seamless wagering experience with a single wallet for their customers who want to bet on sports and on horse racing with FanDuel TV driving ongoing engagement beginning in January 2023. • We announced a multi-year agreement with DraftKings to provide ADW technology and other services. • We announced the exit of the Online Sports & Casino business in February 2022 and ceased online wagering in Tennessee, Colorado, Indiana, New Jersey, and Michigan. • We have executed strategic market access agreements with Bet365 in Pennsylvania and with Golden Nugget in Indiana to monetize our online wagering skins.
TwinSpires Segment: • Adjusted EBITDA was $132.1 million, up $18.0 million or 16% from fiscal year 2022. • TwinSpires Horse Racing: ◦ We launched a multi-year agreement with FanDuel to enable FanDuel to create a fully integrated and seamless wagering experience with a single wallet for their customers who want to bet on sports and horse racing with FanDuel. ◦ We launched a multi-year agreement with DraftKings to provide ADW technology and other services. • Exacta: We completed the acquisition of Exacta, a leading provider of central determinate system technology in HRMs across the country. • Sports Betting: We opened seven retail sports books and monetized three of our Kentucky online sports betting licenses upon the authorization of sports betting in Kentucky. 34 Gaming Segment: • Adjusted EBITDA was a record $488.6 million, up $66.7 million or 16% from fiscal year 2022. • Terre Haute Casino Resort : We continued construction of a $290 million casino, hotel, and entertainment venue in Terre Haute, Indiana scheduled to open in the second quarter of 2024.
Removed
In the first quarter of 2022, we updated our operating segments to reflect the internal management reporting used by our chief operating decision maker to evaluate results of operations and to assess performance and allocate resources.
Added
For additional information, refer to Note 21, Segment Information to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. 2023 Transactions Exacta Systems, LLC Acquisition On August 22, 2023, the Company completed its previously announced acquisition of Exacta Systems, LLC ("Exacta Transaction").
Removed
During the first quarter of 2022, our chief operating decision maker decided to include the results of our United Tote business in the TwinSpires segment as we evolve our strategy to integrate the United Tote offering with TwinSpires Horse Racing, which we believe will create additional business-to-business revenue opportunities.
Added
Exacta Systems ("Exacta") is a leading provider of central determinate system technology in HRMs across the country. Exacta’s system architecture supports multiple game vendors and virtually unlimited math modeling capabilities on a single central determinate system enabling Exacta to deliver a diverse gaming library to Company owned and third-party HRM entertainment venues in Kentucky, Virginia, Wyoming, and New Hampshire.
Removed
The P2E Transaction also included development rights for two properties currently under development in Dumfries and Emporia, Virginia with up to five additional Historical Racing Machines ("HRMs") entertainment venues as well as ONE Casino and Resort in collaboration with Urban One.
Added
For additional information, refer to Note 3, Acquisitions to the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Arlington Sale On February 15, 2023, we closed on the sale of the Arlington property in Arlington Heights, Illinois. We sold 326-acres to the Chicago Bears for $197.2 million.
Removed
The Company plans to develop an expanded charitable gaming facility in Salem to accommodate HRMs and table games. As part of the Chasers Transaction, the Company made an initial payment to the sellers for rights to operate the poker room and to build a historical racing entertainment venue.
Added
The net proceeds of $195.7 million were used to pay down the outstanding balance amount on our revolving credit facility that was drawn on to fund the acquisition of substantially all the assets of Peninsula Pacific Entertainment ("P2E"). For additional information, refer to Note 4, Dispositions to the notes to consolidated financial statements included in Item 8.
Removed
We recognized a gain of $274.6 million on the sale of the land, which is included in other income in the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss).
Added
Financial Statements and Supplementary Data of this Annual Report on Form 10-K. Lady Luck Casino Nemacolin On June 26, 2023, the Company's management agreement for Lady Luck Casino Nemacolin ("Lady Luck") in Farmington, Pennsylvania expired and was not renewed.
Removed
Exacta Systems, LLC Acquisition On December 19, 2022, the Company announced that it entered into a definitive agreement under which we would acquire all the outstanding equity interests of Exacta Systems, LLC ("Exacta") for total consideration of $250.0 million in cash (the "Exacta Transaction"), subject to certain working capital and other purchase price adjustments.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed2 unchanged
Biggest changeAssuming the outstanding balance of the debt facility remains constant, a one-percentage point increase in the LIBOR or SOFR rate would reduce net income and cash flows from operating activities by $15.4 million. The phase-out of LIBOR for existing debit agreements is set for June 30, 2023.
Biggest changeAssuming the outstanding balance of the debt facility remains constant, a one-percentage point increase in the SOFR rate would reduce net income and cash flows from operating activities by $12.9 million. 46
General economic trends Our business is sensitive to consumer confidence and reductions in consumers' discretionary spending, which may result from challenging economic conditions, unemployment levels and other changes in the economy. Demand for entertainment and leisure activities is sensitive to consumers’ disposable incomes, which can be adversely affected by economic conditions and unemployment levels.
General economic trends Our business is sensitive to consumer confidence and reductions in consumers' discretionary spending, which may result from challenging economic conditions, inflation, unemployment levels and other changes in the economy. Demand for entertainment and leisure activities is sensitive to consumers’ disposable incomes, which can be adversely affected by economic conditions and unemployment levels.
On December 31, 2022, we had $2.1 billion outstanding under our Credit Agreement, which bears interest at LIBOR and SOFR based variable rates. We are exposed to market risk on variable rate debt due to potential adverse changes in these rates.
On December 31, 2023, we had $1.8 billion outstanding under our Credit Agreement, which bears interest at SOFR based variable rates. We are exposed to market risk on variable rate debt due to potential adverse changes in these rates.
Removed
The Credit Agreement includes a general process for establishing an alternative reference rate to the extent LIBOR is phased out. The Company is in the process of transitioning its financing from LIBOR to alternative reference rates. These transition activities are not expected to have a material impact on the Company’s financial statements. 45

Other CHDN 10-K year-over-year comparisons