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What changed in Churchill Downs Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Churchill Downs Inc's 2023 and 2024 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 2024 report.

+245 added−278 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-21)

Top changes in Churchill Downs Inc's 2024 10-K

245 paragraphs added · 278 removed · 188 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

64 edited+24 added−36 removed49 unchanged
Biggest changeTwinSpires 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.
Biggest changeWagering Services and Solutions The Wagering Services and Solutions segment includes the revenue and expenses from pari-mutuel wagers through TwinSpires, our retail and online sports betting business, United Tote Company ("United Tote"), and Exacta Systems, LLC ("Exacta"). 6 TwinSpires TwinSpires is an advance deposit wagering ("ADW") business that 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.
Criteria used in determining whether to grant a license to conduct gaming operations, while varying between jurisdictions, generally include consideration of factors such as the good character, honesty, and integrity of the applicant; the financial stability, integrity, and responsibility of the applicant, including whether the operation is adequately capitalized in the state and exhibits the ability to maintain adequate insurance levels; the quality of the applicant’s gaming facilities; the amount of revenue to be derived by the applicable state from the operation of the applicant’s gaming facility; the applicant’s practices with respect to minority hiring and training; and the effect on competition and general impact on the community.
Criteria used in determining whether to grant a license to conduct gaming operations, while varying between jurisdictions, generally include consideration of factors such as the good character, honesty, and integrity of the applicant; the financial stability, integrity, and responsibility of the 12 applicant, including whether the operation is adequately capitalized in the state and exhibits the ability to maintain adequate insurance levels; the quality of the applicant’s gaming facilities; the amount of revenue to be derived by the applicable state from the operation of the applicant’s gaming facility; the applicant’s practices with respect to minority hiring and training; and the effect on competition and general impact on the community.
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.
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.
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.
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 existing gaming operations.
Although the specific form may vary, states that regulate horse racing generally do so through a horse racing commission or other gambling regulatory authority. In general, regulatory authorities perform background checks on all racetrack owners prior to granting the necessary operating licenses. Horse owners, trainers, jockeys, drivers, stewards, judges, and backstretch personnel are also subject to licensing by governmental authorities.
Although the specific form may vary, states that regulate horse racing generally do so through a horse racing commission or other gambling regulatory authority. In general, regulatory authorities perform background checks on all racetrack owners prior to granting the necessary operating licenses. Horse owners, trainers, jockeys, drivers, stewards, judges, and backside personnel are also subject to licensing by governmental authorities.
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.
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.
Under federal law, we are required to record and submit detailed reports of currency transactions involving greater than $10,000 at our gaming facilities and racetracks as well as any suspicious activity that may occur at such facilities. Failure to comply with these requirements could result in fines or cessation of operations.
Under federal law, we are required to record and submit detailed reports of currency transactions 13 greater than $10,000 at our gaming facilities and racetracks as well as any suspicious activity that may occur at such facilities. Failure to comply with these requirements could result in fines or cessation of operations.
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.
Wagering Services and Solutions 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.
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.
United Tote provides totalisator services which accumulate wagers, calculate payoffs, and display 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.
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.
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, other miscellaneous services, and revenue from food and beverage services.
ITEM 1. BUSINESS Overview Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby.
ITEM 1. BUSINESS Overview Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for over 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby.
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.
Wagering Services and Solutions TwinSpires TwinSpires 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 sports betting business competes for customers with retail, mobile, and online offerings from commercial brick-and-mortar casinos and racetracks.
The facility also has permanent lighting to accommodate night races. We have a saddling paddock, and the stable area has barns sufficient to accommodate 1,400 horses and a 114-room dormitory for backstretch personnel.
The facility also has permanent lighting to accommodate night races. We have a saddling paddock and our stable area has barns sufficient to accommodate 1,400 horses and a 114-room dormitory for backside personnel.
The ownership, operation, and management of our Live and Historical Racing, TwinSpires, and Gaming segments are subject to regulation under the laws and regulations of each of the jurisdictions in which we operate. Our businesses and properties are also subject to legislative actions at both the federal and state level.
The ownership, operation, and management of our Live and Historical Racing, Wagering Services and Solutions, and Gaming segments are subject to regulation under the laws and regulations of each of the jurisdictions in which we operate. Our businesses and properties are also subject to legislative actions at both the federal and state level.
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.
Removal of the ban gives states the authority to authorize sports wagering. 9 Live and Historical Racing In 2024, approximately 31,000 thoroughbred horse races were conducted in the U.S., which was down 2.8% compared to 2023. As a racetrack operator, we compete for horses with other racetracks running live racing meets at or near the same time as our races.
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.
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 our Fair Grounds Race Course and Slots property, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum.
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.
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.
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.
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.
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.
Exacta is a leading provider of central determinant 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 determinant system enabling Exacta to deliver a diverse gaming library to Company owned and third-party HRM entertainment venues in Virginia, Kentucky, Wyoming, New Hampshire, and is expanding internationally.
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.
Removal of the ban gave states the authority to authorize sports wagering. Sports betting has been authorized and is operational in thirty-eight states and the District of Columbia as of December 31, 2024. Each state has different structures for the number of allowable industry participants, license fees, taxes, and other operational requirements.
The 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.
The following table summarizes key information regarding our gaming properties: 7 State Property Acres Casino Space (Sq. ft.) Slots and Video Lottery Terminals (a) Table Games Hotel Rooms Retail Sportsbook (b) Wholly owned Florida Calder Casino 54 106,000 1,070 6 N/A N/A Indiana Terre Haute Casino Resort 48 36,000 1,040 36 122 ü Iowa Hard Rock Iowa 15 41,000 670 25 54 ü Louisiana Fair Grounds Race Course and Slots and Video Services LLC 145 33,000 2,040 N/A N/A ü Maine Oxford Casino and Hotel 97 27,000 970 23 107 N/A Maryland Ocean Downs Casino and Racetrack 167 70,000 900 19 N/A ü Mississippi Harlow's Casino Resort and Spa 85 33,000 660 13 105 ü Mississippi Riverwalk Casino Hotel 22 25,000 560 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 2,220 N/A N/A ü Total 799,000 14,860 367 669 (a) Includes HRMs and video poker machines at Fair Grounds Race Course and Slots and Video Services LLC.
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.
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") Retail Race & Sportsbook (a) Kentucky Derby City Gaming & Hotel Louisville, Kentucky 55,000 1,270 ü Kentucky Derby City Gaming Downtown Louisville, Kentucky 43,000 450 ü Kentucky Turfway Park Northern Kentucky 45,000 810 ü Kentucky Newport Northern Kentucky 23,000 460 ü Kentucky Oak Grove Southwestern Kentucky 180,000 1,240 ü Kentucky Marshall Yards (b) Southwestern Kentucky 9,000 250 ü Kentucky Ellis Park Western Kentucky 40,000 300 ü Kentucky Owensboro (c) Western Kentucky 24,000 600 ü New Hampshire Chasers (d) Salem, New Hampshire 4,000 (d) N/A Virginia Colonial Downs / Rosie's New Kent / Central Virginia 127,000 490 N/A Virginia Rosie's (e) Richmond / Central Virginia 54,000 1,200 N/A Virginia Roseshire (f) Henrico County / Central Virginia 7,000 175 N/A Virginia Rosie's Dumfries / Northern Virginia 19,000 150 N/A Virginia The Rose 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 765,000 10,405 (a) The Company's retail sports betting business is included in the Wagering Services and Solutions segment.
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.
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.
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.
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, including FanDuel and DraftKings, and we earn commissions from white label ADW products and services.
Our commitment to the safety of our employees, customers, and community remains a top priority, and we have safety programs at all our properties to facilitate identification and implementation of safety practices. Governmental Regulations and Potential Legislative Changes We are subject to various federal, state, local, and international laws and regulations that affect our businesses.
The safety of our team members, customers, and community remains a top priority, and we have established safety programs across all our properties to ensure best practices are continuously identified and implemented. Governmental Regulations and Potential Legislative Changes We are subject to various federal, state, local, and international laws and regulations that affect our businesses.
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.
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 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.
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. Churchill Down Racetrack conducts approximately 80 live race days each year.
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.
As of December 31, 2024, the Company is operational in ten states for retail sports betting. 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.
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.
Ocean Downs is a gaming facility with several dining options, a retail sportsbook, and a racetrack that conducts approximately 45 live harness racing days each year. Mississippi Harlow’s Casino Resort and Spa is located in Greenville, Mississippi, and is a gaming facility and hotel with two dining facilities and a retail sportsbook.
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.
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.
Our core health and welfare benefits are supplemented with specific programs to manage or improve common health conditions and to provide a variety of voluntary benefits and paid time away from work programs. We also provide several innovative programs designed to promote physical, emotional, and financial well-being.
Our core health and welfare offerings are supplemented with targeted programs designed to manage or improve common health conditions, along with a variety of voluntary benefits and paid time-off programs. 10 Additionally, we provide innovative initiatives aimed at promoting physical, emotional, and financial well-being.
(b) The Company plans to open the Owensboro HRM entertainment venue in the first quarter of 2025. (c) The Company plans to build a new charitable gaming facility to accommodate HRMs and table games. (d) The Company plans to open The Rose (Dumfries) late in the third quarter of 2024.
(b) The Company plans to open Marshall Yards Racing & Gaming in the first quarter of 2026. (c) The Company opened Owensboro Racing & Gaming in February 2025. (d) The Company plans to build a new charitable gaming facility to accommodate HRMs and table games.
Gaming authorities have very broad discretion in determining whether an applicant qualifies for licensing or should be deemed suitable.
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.
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.
Southwestern Kentucky Oak Grove Racing, Gaming & Hotel ("Oak Grove") opened in 2020 and is located approximately one-hour north of Nashville, Tennessee. Oak Grove is a premier state-of-the-art live harness racing and HRM entertainment venue with a 128-room hotel, a simulcast center, event center, an amphitheater, recreational vehicle park, equestrian center, and retail sports betting.
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.
Rivers Des Plaines is a gaming entertainment venue located on 21 acres and has seven dining facilities, an approximate 5,000 square-foot state-of-the-art BetRivers Sports Bar, and a 10,000 square-foot ballroom for private events and live entertainment. Ohio The Company has a 50% equity investment in Miami Valley Gaming and Racing ("MVG") located just north of Cincinnati, Ohio.
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.
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.
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.
We can reacquire the facility at any time for $1.00 subject to the terms of the lease. Since 2021, we have completed several major multi-year capital investments at Churchill Downs Racetrack: The Homestretch Club, the First Turn Experience, the Jockey Club Suites renovation, and the Paddock Project.
Colonial Downs has a dirt track, the widest turf track oval in North America, a simulcast area, food and beverage offerings, and two off-track betting facilities ("OTBs"). Colonial Downs conducted 27 live racing days in 2023 and plans to conduct 28 live racing days in 2024.
Colonial Downs has a dirt track, the widest turf track oval in North America, a simulcast area, food and beverage offerings, and two off-track betting facilities ("OTBs"). Colonial Downs conducts approximately 30 live race days each year with plans to increase up to 50 live race days per 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.
Louisiana Fair Grounds Race Course & Slots ("Fair Grounds") is located in New Orleans, Louisiana. Fair Grounds is a gaming facility and racecourse with a bar, simulcast facility, dirt and turf track, and stabling area. Fair Grounds conducts approximately 80 live racing days each year.
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.
Headquartered in Louisville, Kentucky, CDI has expanded through the acquisition, development, and operation of live and historical racing entertainment venues, the growth of the online wagering businesses, and the acquisition, development, and operation of regional casino gaming properties. Business Segments The Company manages its business through three reportable segments: Live and Historical Racing, Wagering Services and Solutions, and Gaming.
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.
MVG is a gaming entertainment venue with a harness racetrack, a racing simulcast center, multiple food and drink offerings, and a retail sportsbook. All Other We have aggregated our captive insurance company that was established in April 2024 as well as certain corporate operations in All Other to reconcile to consolidated results.
(b) The Company's retail sports betting business at its wholly owned properties is included in the TwinSpires segment. (c) The Company plans to open the Terre Haute Casino Resort in the second quarter of 2024. Wholly owned gaming properties Florida Calder Casino ("Calder") in Miami Gardens, Florida is located near Hard Rock Stadium, home of the Miami Dolphins.
(b) The Company's retail sports betting business at its wholly owned properties is included in the Wagering Services and Solutions segment. Wholly owned gaming properties Florida Calder Casino ("Calder") in Miami Gardens, Florida is located near Hard Rock Stadium, home of the Miami Dolphins. Calder offers two dining facilities and an entertainment venue.
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.
The Paddock Project created 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 providing 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. 4 The Company is also investing up to $85 million to renovate the Starting Gate Pavilion and Courtyard to enhance the existing grandstand and provide improved amenities for the 151st Kentucky Derby in May 2025.
Marks and Intellectual Property We hold numerous state and federal service mark registrations on specific names and designs in various categories including the entertainment business, apparel, paper goods, printed matter, housewares, and glass. We license the use of these service marks and derive revenue from such license agreements.
The owner of a property may be subject to claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. 14 Marks and Intellectual Property We hold numerous state and federal service mark registrations on specific names and designs in various categories including the entertainment business, apparel, paper goods, printed matter, housewares, and glass.
The presence of, or failure to remediate properly, such substances may materially adversely affect the ability to sell or rent such property or to borrow funds using such property as collateral. The owner of a property may be subject to claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.
The presence of, or failure to remediate properly, such substances may materially adversely affect the ability to sell or rent such property or to borrow funds using such property as collateral.
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.
DCG Downtown has a gaming area, a main-level sports bar with a stage for live entertainment, retail sports betting, a premium bourbon bar, and an elegant wine lounge for guests, including locals, tourists, and convention attendees. Northern Kentucky Newport Racing & Gaming ("Newport") opened in October 2020 and is located within three miles of Cincinnati, Ohio.
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.
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. Sports Betting Our sports betting business includes the results of our retail sportsbooks at our wholly owned properties and online sports betting through third parties.
Sports Betting and iGaming Regulations and Potential Legislative Changes 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 gave states the authority to authorize sports wagering.
Changes in the form of new legislation or regulatory activity at the state or federal level could adversely impact our mobile and online ADW business. 11 Sports Betting and iGaming Regulations and Potential Legislative Changes 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.
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.
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 people are essential to our operations and fundamental to the long-term success of our Company.
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").
Del Lago is a gaming facility and a hotel with several dining options and a retail sportsbook. Pennsylvania Presque Isle Downs and Casino ("Presque Isle") is located in Erie, Pennsylvania. Presque Isle is a gaming facility with three dining facilities, a retail sportsbook, an entertainment venue and thoroughbred racetrack that conducts approximately 80 live racing days each year.
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.
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. 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.
The total number of days on which each racetrack conducts live racing may fluctuate annually based on applications and approvals. Kentucky In Kentucky, horse racing racetracks and HRM facilities are subject to the licensing and regulation of the Kentucky Horse Racing Commission ("KHRC").
The total number of days on which each racetrack conducts live racing may fluctuate annually based on applications and approvals. Louisiana In Louisiana, the 2021 Historical Horse Racing Act (the "2021 HHR Act") allows off-track betting facilities ("OTBs") to have up to 50 HRMs.
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.
Riverwalk Casino Hotel is located in Vicksburg, Mississippi, and is a gaming facility and hotel with two dining facilities and a retail sportsbook. New York Del Lago Resort and Casino ("del Lago") was acquired by the Company in November 2022 and is located in Waterloo, New York.
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.
The facility includes clubhouse and grandstand seating for approximately 5,000 guests, a general admissions area, several dining facilities, and a retail sportsbook. The stable area consists of barns that can accommodate approximately 1,900 horses and living quarters for approximately 130 people. Fair Grounds also owns and operates 15 OTBs, 13 of which have over 500 HRMs.
The process focuses on accelerating talent development, strengthening succession pipelines, and advancing diversity in gender, race, and experience. Compensation, Benefits, Safety and Wellness We strive to offer market competitive salaries and wages for our team members, and we offer comprehensive health and retirement benefits to eligible employees.
Compensation, Benefits, Safety and Wellness We strive to offer competitive salaries and wages while providing comprehensive health and retirement benefits to eligible team members.
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.
Derby City Gaming is a state-of-the-art HRM facility located at the Churchill Downs Racetrack auxiliary training facility and has a center bar with large format televisions, two food venues, an open-air gaming patio, and retail sports betting. Derby City Gaming was expanded in the second quarter of 2023.
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.
In April 2024, the Company completed the sale of 49% of United Tote, a wholly owned subsidiary of CDI, to NYRA Content Management Solutions, LLC ("NYRA"), a subsidiary of the New York Racing Association, Inc. Exacta Exacta was acquired by the Company on August 22, 2023.
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.
Our highest level of seasonal employment occurs in the second quarter, coinciding with the Kentucky Derby. As of the same date, approximately 840 full-time team members were covered by 12 collective bargaining agreements. We have not experienced any material operational disruptions due to labor disputes. Talent Acquisition, Development and Retention We are committed to attracting, developing, and retaining top talent.
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.
The expansion included a 123-room hotel, a VIP gaming area, a new sports bar, a stage for live entertainment, and an upscale-casual restaurant and bar. 5 Derby City Gaming Downtown ("DCG Downtown") opened in December 2023 in downtown Louisville, Kentucky.
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.
Newport is an HRM entertainment venue that includes a simulcast area, food and beverage offerings, and retail sports betting. Turfway Park Racing & Gaming ("Turfway Park") opened in September 2022 in Northern Kentucky. Turfway Park is a state-of-the-art live thoroughbred racing and HRM entertainment venue with an event center, food and beverage offerings, and retail sports betting.
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.
Terre Haute has 1,040 slot machines, 36 table games, a state-of-the-art sportsbook, and offers regionally inspired food and beverage amenities. Iowa The Company acquired Hard Rock Hotel and Casino in Sioux City, Iowa ("Hard Rock Iowa") in November 2022, which is a gaming facility and hotel with food and beverage offerings, a retail sportsbook, and entertainment venues.
The Company also invested $30.0 million in a seventh Virginia based HRM entertainment venue that opened on September 26, 2023 in Emporia, Virginia with 150 HRMs and a restaurant and bar.
The Company has also created the Virginia Derby to be held in March 2025 as a qualifying race to the Kentucky Derby. Rosie's Emporia was opened in September 2023 in Emporia, Virginia with 150 HRMs and a restaurant and bar.
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 Rose Gaming Resort ("The Rose") was opened in November 2024 in Dumfries, Virginia with a 102-room hotel, eight food and beverage options, and 1,650 HRMs. Rosie’s Richmond is located in Richmond, Virginia and features 750 HRMs, a simulcast wagering area, food & beverage offerings, and a center bar.
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.
The Wagering Services and Solutions segment was previously known as the TwinSpires segment. We aggregate our other businesses as well as certain corporate operations in All Other. We report net revenue and operating expense associated with these reportable segments and other information about these segments in Part II, Item 8. Financial Statements and Supplementary Data, contained within this Report.
Removed
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.
Added
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.
Removed
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.
Added
These investments transformed key areas of Churchill Downs Racetrack that enhance the experience for our guests. The Paddock Project was completed for the 150th running of the Kentucky Derby. The redesigned area improved the flow of guests throughout the paddock.
Removed
The Company invested $90.0 million in the First Turn Experience which opened for the 149 th Kentucky Derby in May 2023.
Added
(e) The Company plans to expand Rosie's Richmond HRM venue to accommodate a total of 1,200 HRMs in the third quarter of 2025. (f) The Company plans to open the Roseshire in Henrico County in the fourth quarter of 2025. Kentucky Louisville Derby City Gaming & Hotel ("Derby City Gaming") opened in September 2018 in Louisville, Kentucky.
Removed
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.
Added
Marshall Yards Racing & Gaming ("Marshall Yards") is expected to open in the first quarter 2026 in Calvert City, Kentucky. The new state-of-the-art HRM entertainment venue will have 250 HRMs, a sports bar, retail sportsbook, and a simulcast center.
Removed
The Paddock Project is scheduled for completion in time for the 150 th Kentucky Derby in May 2024. In July 2023, we also announced a $14.0 million renovation project that will update and refresh the 61 Jockey Club Suites and associated areas along the homestretch.
Added
Western Kentucky Ellis Park Racing & Gaming ("Ellis Park") was acquired by the Company in September 2022 and is located five miles from Evansville, Indiana. Ellis Park is a live thoroughbred racing and HRM entertainment venue with food and beverage offerings and retail sports betting.
Removed
The Jockey Club renovation is scheduled for completion in time for the 150 th Kentucky Derby in May 2024.
Added
Owensboro Racing & Gaming ("Owensboro") opened in February 2025 in Owensboro, Kentucky with 600 HRMs, a retail sportsbook, simulcast wagering, and multiple food and beverage offerings. Virginia Colonial Downs Racetrack ("Colonial Downs") and six historical racing entertainment venues across Virginia were acquired by the Company in November 2022.
Removed
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.
Added
Rosie’s Richmond will be expanded by the third quarter of 2025 to add an additional 450 HRMs. Rosie’s Hampton is located in Hampton, Virginia and features 700 HRMs, a simulcast wagering area, and a food & beverage outlet.
Removed
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.
Added
Roseshire in Henrico County is expected to open in the fourth quarter of 2025 as a state-of-the-art HRM entertainment venue in Henrico County, Virginia. Roseshire will open with 175 HRMs. New Hampshire Chasers Poker Room ("Chasers") was acquired in 2022 and is in Salem, New Hampshire.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are vulnerable to additional or increased taxes and fees We believe that the prospect of raising significant additional revenue through taxes and fees is one of the primary reasons that certain jurisdictions permit legalized gaming.
Biggest changeOur ability to respond to periods of economic contraction may be limited, as certain of our costs remain fixed or even increase when revenue declines. 16 Due to the nature of our business, we are subject to taxation in a number of jurisdictions and changes in, or new interpretations of, tax laws, tax rulings or their application by tax authorities could result in additional tax liabilities and could materially affect our financial condition and results of operations We believe that the prospect of raising significant additional revenue through taxes and fees is one of the primary reasons that certain jurisdictions permit legalized gaming.
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.
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.
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.
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.
Other factors that could influence our reputation include the quality of the services we offer and our actions with regard to social issues such as diversity, human rights, and support for local communities. Broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of us or our properties.
Other factors that could influence our reputation include the quality of the services we offer and public perception of our actions with regard to social issues such as diversity, human rights, and support for local communities. Broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of us or our properties.
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.
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 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.
Environmental laws and regulations could hold us responsible for the cost of cleaning up hazardous materials contaminating real property that we own or operate (or previously owned or operated) or properties at which we have disposed of hazardous materials, even if we did not cause the contamination. Some of our facilities are subject to CAFO regulations.
Environmental laws and regulations could hold us responsible for the cost of cleaning up hazardous materials contaminating real property that we own or operate (or previously owned or operated) or properties at which we have disposed of hazardous materials, even if we did not cause the contamination. Some of our facilities 22 are subject to CAFO regulations.
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.
We intend to focus on market access and our retail operations for our 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.
Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for the associated expense and penalties. If we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.
Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for the associated expense and 20 penalties. If we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.
Anti-gaming conclusions and recommendations of other governmental or quasi-governmental bodies could form the basis for new laws, regulations, and enforcement policies. The extensive regulation by both state and federal authorities of gaming activities also can be significantly affected by changes in the political climate and changes in economic and regulatory policies.
Anti-gaming conclusions and 24 recommendations of other governmental or quasi-governmental bodies could form the basis for new laws, regulations, and enforcement policies. The extensive regulation by both state and federal authorities of gaming activities also can be significantly affected by changes in the political climate and changes in economic and regulatory policies.
Our main technological advantage versus potential competitors is our software lead-time in the market and our experience in operating an Internet-based wagering network. It may be difficult to maintain our competitive technological position against current and potential competitors, especially those with greater financial resources.
Our main technological advantage versus potential competitors is our software lead-time in the market and our experience in operating an Internet-based wagering network. It may be difficult to maintain our competitive technological position against current and potential competitors, 18 especially those with greater financial resources.
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.
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.
Any such union organization efforts could cause disruptions in our business and result in significant costs. Legal and Regulatory Risks We face risks related to pending or future legal proceedings and other actions From time to time, we are a party in various lawsuits and judicial and governmental actions.
Any such union organization efforts could cause disruptions in our business and result in significant costs. 23 Legal and Regulatory Risks We face risks related to pending or future legal proceedings and other actions From time to time, we are a party to various lawsuits and judicial and governmental actions.
We rely on a limited number of vendors to provide video poker and slot machines and any loss of our equipment suppliers could impact our operations. Ensuring the successful implementation and maintenance of any new technology acquired is an additional risk.
We rely on a limited number of vendors to provide video poker, slot, and HRM machines and any loss of equipment suppliers could impact our operations. Ensuring the successful implementation and maintenance of any new technology acquired is an additional risk.
The successful integration of newly acquired businesses into our operations has required and will continue to require the expenditure of substantial managerial, operating, financial, and other resources and may also lead to a diversion of our attention from our ongoing business concerns.
The successful integration of newly acquired businesses into our operations has required and will continue to require the expenditure of substantial managerial, operating, financial, and other resources and may also lead to a diversion of our attention 21 from our ongoing business concerns.
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.
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.
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.
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.
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.
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 gaming properties related to our equity investments.
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.
The success of our retail and online sportsbooks 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, • 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.
Despite our efforts, we may not be successful in preventing or detecting such culpable behavior and schemes in a timely manner and the relevant insurance we have obtained may not be sufficient to cover our losses depending on the incident, which could result in losses to our gaming operations and generate negative publicity, both of which could have an adverse effect on our reputation, business, results of operations, and cash flows.
Despite our efforts to safeguard against this risk, we may not be successful in preventing or detecting such culpable behavior and schemes in a timely manner and the relevant insurance we have obtained may not be sufficient to cover our losses depending on the incident, which could result in losses to our gaming operations and generate negative publicity, both of which could have an adverse effect on our reputation, business, results of operations, and cash flows.
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.
Sports betting has been authorized and is operational in thirty-eight states and the District of Columbia as of December 31, 2024. Additional states may 19 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.
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.
We may not be able to respond to rapid technological changes in a timely manner, which may cause customer dissatisfaction Our Wagering Services and Solutions segment and gaming and historical racing properties are characterized by the rapid development of new technologies and the continuous introduction of new products.
Competition for the type of talent we seek to hire is increasingly intense in the geographic areas in which we operate. As a result, we may incur significant costs to attract and retain highly skilled employees. We may be unable to attract and retain the personnel necessary to sustain our business or support future growth.
Competition for the type of talent we seek to hire continues to be a challenge in the geographic areas in which we operate. As a result, we may incur significant costs to attract and retain highly skilled employees. We may be unable to attract and retain the personnel necessary to sustain our business or support future growth.
Economic and External Risks Our business could be adversely affected by the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather, including as a result of climate change Our operating results depend, in large part, on revenues derived from customers visiting our casinos and racetracks, which is subject to the occurrence and threat of extraordinary events that may discourage attendance or expose us to substantial liability.
Economic and External Risks Our business could be adversely affected by the occurrence of extraordinary events, such as terrorist attacks, public health threats, and civil unrest Our operating results depend, in large part, on revenues derived from customers visiting our casinos and racetracks, which is subject to the occurrence and threat of extraordinary events that may discourage attendance or expose us to substantial liability.
If the gaming authorities were to find a key employee unsuitable for licensing, we may be required to sever the employee relationship, or the gaming authorities may require us to terminate the employment of any person who refuses to file appropriate applications. Either result could significantly impact our operations. We have observed an increasingly competitive labor market.
If the gaming authorities were to find a key employee unsuitable for licensing, we may be required to sever the employee relationship, or the gaming authorities may require us to terminate the employment of any person who refuses to file appropriate applications. Either result could significantly impact our operations. We continue to experience a competitive labor market.
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.
There can be no assurance as to the returns that we will receive from sports betting business. Operational Risks Our business is subject to online security risk, including data privacy and cybersecurity breaches.
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.
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.
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.
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.
Ownership and development of our real estate requires significant expenditures and ownership of such properties is subject to risk, including risks related to environmental liabilities We own extensive real estate holdings and make significant capital investments to grow our operations.
In addition, we may not receive the intended benefits of such capital investments. Ownership and development of our real estate requires significant expenditures and ownership of such properties is subject to risk, including risks related to environmental liabilities We own extensive real estate holdings and make significant capital investments to grow our operations.
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.
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.
New, relocated, or expanded operations by other persons could increase competition for our operations and could have a material adverse impact on us. Our operations also face competition from other leisure and entertainment activities, including shopping, athletic events, television and movies, concerts, and travel.
New, relocated, or expanded operations by other persons could increase competition for our operations and could have a material adverse impact on us. Our operations also face competition from other leisure and entertainment activities.
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.
Increased employee turnover, changes in the availability of our workers, or labor shortages in our supply chain could result in increased costs and impact our ability to fully staff our operations, which could negatively affect our financial condition, results of operations, or cash flows. 17 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.
It is important for competitive reasons that we offer the most popular and up-to-date machine games with the latest technology to our guests. A substantial majority of the slot machines sold in the U.S. in recent years were manufactured by a few select companies, and there has been extensive consolidation activity within the gaming equipment sector.
It is important for competitive reasons that we offer the most popular and up-to-date machine games with the latest technology to our guests. A substantial majority of the slot and HRM machines sold in the U.S. are manufactured by a few select companies.
State attorney generals, regulators, and other law enforcement officials may interpret state laws, federal laws, constitutional principles, and the related regulations in a different manner than we do. States may take affirmative action to make ADW expressly unlawful.
State attorney generals, regulators, and other law enforcement officials may interpret state laws, federal laws, constitutional principles, and the related regulations in a different manner than we do. Certain states have taken affirmative action and more may take action in the future to make advance deposit wagering unlawful or to limit the number of ADW licenses.
Our wagering and racing (including HRM) facilities must meet the licensing requirements of various regulatory authorities. We have obtained all governmental licenses, registrations, permits, and approvals necessary for operation. However, we may be unable to maintain our existing licenses.
Our wagering and racing (including HRM) facilities must meet the licensing requirements of various regulatory authorities. We may be unable to maintain our existing licenses.
We are exposed to increases in interest rates on our variable-rate borrowings, which consist of borrowings under our credit facility and our term loans.
During inflationary periods, interest rates have historically increased, which would have a direct effect on the interest expense of our borrowings. We are exposed to increases in interest rates on our variable-rate borrowings, which consist of borrowings under our credit facility and our term loans.
Our success depends upon new product development and technological advancements, including the development of new wagering platforms and features. While we expend resources on research and development and product enhancement, we may not be able to continue to improve and market our existing products or technologies or develop and market new products in a timely manner.
While we expend resources on research and development and product enhancement, we may not be able to continue to improve and market our existing products or technologies or develop and market new products in a timely manner. Further technological developments from our competitors may cause our products or technologies to become obsolete or noncompetitive.
Regulators may also levy substantial fines against or seize our assets or the assets of our subsidiaries or the people involved in violating pari-mutuel laws or regulations. For example, individual plaintiffs associated with video poker and truck stops in Louisiana are challenging the constitutionality of the Louisiana 2021 HHR Act which may adversely impact Fair Ground’s historical racing operations.
For example, individual plaintiffs associated with video poker and truck stops in Louisiana are challenging the constitutionality of the Louisiana 2021 HHR Act which may adversely impact Fair Ground’s historical racing operations.
Any unscheduled interruption in the availability of our websites and our services could result in an immediate, and possibly substantial, loss of revenue.
Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems could result in lengthy interruptions in our services. Any unscheduled interruption in the availability of our websites and our services could result in an immediate, and possibly substantial, loss of revenue.
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.
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.
Since horse racing is conducted outdoors, unfavorable weather conditions, including extremely high and low temperatures, heavy rains, high winds, storms, tornadoes, and hurricanes, could cause events to be canceled and/or attendance to be lower, resulting in reduced wagering. Climate change could have an impact on longer-term natural weather trends.
Our business may be subject to fluctuations due to seasonality and inclement weather, including as a result of climate change, that could result in volatility and have an adverse effect on our operating results Unfavorable weather conditions, including extremely high and low temperatures, heavy rains, high winds, storms, tornadoes, and hurricanes, have caused and may in the future cause events to be canceled and/or attendance to be lower, resulting in reduced wagering.
Economic trends can also impact the financial viability of other industry constituents, making collection of amounts owed to us uncertain. Our ability to respond to periods of economic contraction may be limited, as certain of our costs remain fixed or even increase when revenue declines.
Economic trends can also impact the financial viability of other industry constituents, making collection of amounts owed to us uncertain.
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.
Our online wagering, HRM and brick-and-mortar casino businesses depend upon our communications hardware and our computer hardware. 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.
Future development projects may require significant capital commitments and the incurrence of additional debt, which could have a material adverse impact on our business. In addition, we may not receive the intended benefits of such capital investments.
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 in new venues. Future development projects may require significant capital commitments and the incurrence of additional debt, which could have a material adverse impact on our business.
The loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for a license in another jurisdiction. Regulatory authorities also have input into important aspects of our operations, including hours of operation, location, or relocation of a facility, and numbers and types of HRMs.
Regulatory authorities also have input into important aspects of our operations, including hours of operation, location, or relocation of a facility, and numbers and types of HRMs. Regulators may also levy substantial fines against or seize our assets or the assets of our subsidiaries or the people involved in violating pari-mutuel laws or regulations.
Removed
We have taken measures to safeguard our interests including the implementation of systems, processes, and technologies to mitigate against these risks, extensive employee training, surveillance, security, and investigation operations and adoption of appropriate security features on our chips such as embedded radio frequency identification tags.
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Inclement weather conditions may deter or prevent customers from reaching the facilities, including our gaming and HRM venues. Climate change could have an impact on longer-term natural weather trends.
Removed
Increased employee turnover, changes in the availability of our workers, or labor shortages in our supply chain could result in increased costs and impact our ability to fully staff our operations, which could negatively affect our financial condition, results of operations, or cash flows.
Added
The Company's competitors may adopt new technologies and technological advancements, such as using artificial intelligence and machine learning, to pursue new products, services and approaches more quickly, successfully, and effectively than the Company. Our success depends upon new product development and technological advancements, including the development of new wagering platforms and features.
Removed
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.
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The prices of new machines may escalate and manufacturers could refuse to sell us machines featuring the most popular games, instead requiring participating lease arrangements to acquire the machines. Such agreements may be substantially more expensive over the long term than the cost of purchasing a new machine. We rely on vendors that may use components produced in foreign countries.
Removed
Such agreements may also include a percentage payment of coin-in or net win. Generally, a participating lease is substantially more expensive over the long term than the cost to purchase a new machine.
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Restrictions on international trade, such as tariffs and other controls on imports or exports, could impact the pricing and availability of slot and HRM machines. Availability of the most popular games may also be limited by the manufacturer. If we are unable to maintain availability of the most popular games, it could impact our ability to attract and retain customers.
Removed
For competitive reasons, we may be forced to purchase new slot machines or enter into participating lease arrangements that are more expensive than the costs associated with the continued operation of our existing slot machines. If the newer slot machines do not result in sufficient incremental revenue to offset the increased investment, it could adversely affect our operations and profitability.
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While these attacks have not had a significant impact on the Company to date, we may continue to experience cyber attacks, and such attacks could have an adverse impact on our business in the future.
Removed
Our online wagering, HRM and brick-and-mortar casino businesses depend upon our communications hardware and our computer hardware. We have built certain redundancies into our systems to attempt to avoid downtime in the event of outages, system failures or damage.
Added
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).
Removed
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.
Added
Any of these events could have a material adverse impact on our financial condition, results of operations, and cash flows.
Removed
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.
Removed
Federal Reserve may continue to raise the federal funds rate, which will likely lead to higher interest rates in the credit markets and the possibility of lower asset values, slowing economic growth and/or possibly leading to a recession.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CTO oversees our information security professionals’ efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents and the efforts for assessing and managing our material risks from cybersecurity threats. Our cybersecurity risk management program includes technical security controls, policy enforcement mechanisms, monitoring systems, employee training, contractual arrangements, tools, and related services from third-party providers.
Biggest changeOur cybersecurity and risk management program includes technical security controls, policy enforcement mechanisms, monitoring systems, employee training, contractual arrangements, tools, and related services from third-party providers. Our CTO has over twenty years of extensive experience in information technology and security.
ITEM 1C. CYBERSECURITY We maintain a comprehensive process for detecting, assessing, and managing material risks from cybersecurity threats as part of our overall enterprise risk management system and processes. Our Chief Technology Officer (“CTO”) oversees our Chief Information Security Officer (“CISO”) and a dedicated team of information security professionals who are responsible for our cybersecurity risk management program.
ITEM 1C. CYBERSECURITY We maintain a comprehensive process for detecting, assessing, and managing material risks from cybersecurity threats as part of our overall enterprise risk management system and processes. Our Chief Technology Officer (“CTO”) oversees our Chief Information Security Officer and a dedicated team of information security professionals who are responsible for our cybersecurity risk management program.
In the event a potentially significant cybersecurity incident is identified by our information security team, such incident is reported to the CD Committee to consider applicable disclosures, with the assistance of outside counsel as needed.
In the 26 event a potentially significant cybersecurity incident is identified by our information security team, such incident is reported to the CD Committee to consider applicable disclosures, with the assistance of outside counsel as needed.
In addition, senior 26 leadership prepares an enterprise risk management report identifying and evaluating enterprise risks, including cybersecurity risks, which is regularly presented to the Audit Committee.
In addition, senior leadership prepares an enterprise risk management report identifying and evaluating enterprise risks, including cybersecurity risks, which is regularly presented to the Audit Committee.
The Audit Committee oversees the processes by which management assesses the Company’s exposure to cybersecurity risks and evaluates the guidelines and policies governing the Company’s monitoring, control, and minimization of such risks. Our CTO regularly reports to the Audit Committee regarding cybersecurity matters. For additional information concerning cybersecurity risks we face, refer to Part I, Item 1A, Risk Factors.
The Audit Committee oversees the processes by which management assesses the Company’s exposure to cybersecurity risks and evaluates the guidelines and policies governing the Company’s monitoring, control, and minimization of such risks. Our CTO regularly reports to the Audit Committee regarding cybersecurity matters.
This does not mean that we meet any particular technical standards, specifications, or requirements of the NIST CSF. We routinely engage consultants and other third parties to assist with our cybersecurity risk management, including third-party penetration tests of our various information technology environments.
We routinely engage consultants and other third parties to assist with our cybersecurity risk management, including third-party penetration tests of our various information technology environments.
Our CTO has over twenty years of extensive experience in information technology and security. We use the National Institute of Standards and Technology Cybersecurity Framework ("NIST CSF") as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
We use the National Institute of Standards and Technology Cybersecurity Framework ("NIST CSF") as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. This does not mean that we meet any particular technical standards, specifications, or requirements of the NIST CSF.
Added
Our CTO oversees our information security professionals’ efforts to prevent, detect, mitigate, and remediate cybersecurity and other emerging technology risks and incidents and the efforts for assessing and managing our material risks from cybersecurity threats.
Added
As of the date of this report, the Company is not aware of any cybersecurity risks that have, or are reasonably likely to, materially affect us, our business strategy, results of operation, or financial condition.
Added
Although we have invested in information security and monitor our systems on an ongoing basis, there can be no guarantee that such efforts will in the future prevent compromises to our information technology systems that could have a material adverse effect on our business. For additional information concerning cybersecurity risks we face, refer to Part I, Item 1A, Risk Factors.

Item 2. Properties

Properties — owned and leased real estate

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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)
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 & Hotel ▪ Marshall Yards Racing & Gaming (Planned opening 1st quarter 2026) ◦ Northern Kentucky ▪ Turfway Park Racing & Gaming ▪ Newport Racing & Gaming (leased) ◦ Western Kentucky ▪ Ellis Park Racing & Gaming ▪ Owensboro Racing & Gaming • Virginia ◦ Central Virginia ▪ Colonial Downs Racetrack & Rosie's in New Kent ▪ Rosie’s in Richmond ▪ Roseshire in Henrico County (Planned opening 4th quarter 2025) ▪ Office space in Richmond (leased) ◦ Northern Virginia ▪ The Rose Gaming Resort in Dumfries ▪ 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) 27 Wagering Services and Solutions • 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 (leased) • Texas - Exacta offices in Austin (leased) Gaming • Florida - Calder Casino in Miami Gardens • Indiana - Terre Haute Casino Resort in Terre Haute • 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)

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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").
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, 2024: Period Total Number of Shares Purchased (1)(2) 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 2024 111,416 $ 143.97 — $ 170.9 November 2024 — — — 170.9 December 2024 186,325 132.99 160,466 149.6 Total 297,741 $ 137.10 160,466 (1) On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million.
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.
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 12, 2025 , there were approximately 2,020 shareholders of record.
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.
We declared a dividend of $0.409 in October 2024, which was paid in January 2025, and we declared a dividend of $0.382 in October 2023, which was paid in January 2024.
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.
The 2021 Stock Repurchase Program includes and is not in addition to the unspent amount remaining under the prior authorization. For more information, refer to Note 9, Shareholders' Equity, to the notes to consolidated financial statements included in this Annual Report on Form 10-K.
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.
We consider the Russell 1000 Index to be our most comparable peer group index. 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Churchill Downs Incorporated $ 100.00 $ 142.44 $ 176.65 $ 155.52 $ 199.12 $ 197.63 Russell 1000 Index $ 100.00 $ 120.96 $ 152.96 $ 123.71 $ 156.53 $ 194.89 S&P Midcap 400 Index $ 100.00 $ 113.66 $ 141.80 $ 123.28 $ 143.54 $ 163.54 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 NOTE 1: Index Data: Copyright Russell Investments.
Added
(2) Includes shares withheld to pay taxes on the vesting of restricted stock and restricted stock units or to pay taxes on the exercise of stock options granted to employees.

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeThese increases were partially offset by a $19.5 million decrease from our wholly owned gaming properties and an $8.5 million decrease from our equity investment in Rivers Des Plaines primarily due to inclement weather in January 2024, regional gaming softness, increased competition, and higher labor and benefit expense; and a $1.2 million decrease from proceeds for business interruption insurance claims in the third quarter 2023 that did not reoccur. • All Other Adjusted EBITDA decreased $15.7 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses driven by enterprise growth. 37 Reconciliation of Net Income to Adjusted EBITDA Years Ended December 31, Change (in millions) 2024 2023 Net income attributable to Churchill Downs Incorporated $ 426.8 $ 417.3 $ 9.5 Net income attributable to noncontrolling interest 2.3 — 2.3 Net income 429.1 417.3 11.8 Adjustments: Depreciation and amortization 199.1 169.0 30.1 Interest expense 289.8 268.4 21.4 Income tax provision 144.1 144.5 (0.4) Stock-based compensation expense 36.1 32.9 3.2 Legal reserves — (1.2) 1.2 Pre-opening expense 29.6 18.6 11.0 Arlington exit costs — 9.4 (9.4) Other expense, net 4.2 7.0 (2.8) Transaction (benefit) expense, net (12.1) 4.8 (16.9) Asset impairments 3.9 24.6 (20.7) Other income, expense: Interest, depreciation and amortization expense related to equity investments 42.0 40.2 1.8 Rivers Des Plaines' legal reserves and transactions costs 0.3 — 0.3 Other charges and recoveries, net (6.9) 2.4 (9.3) Gain on the sale of assets — (114.0) 114.0 Total adjustments 730.1 606.6 123.5 Adjusted EBITDA $ 1,159.2 $ 1,023.9 $ 135.3 Consolidated Balance Sheet The following table is a summary of our overall financial position: As of December 31, Change (in billions) 2024 2023 Total assets $ 7.3 $ 7.0 $ 0.3 Total liabilities 6.2 6.1 0.1 Total shareholders’ equity 1.1 0.9 0.2 • Total assets increased $0.3 billion driven by increased capital expenditures primarily at the Terre Haute Casino Resort, Churchill Downs Racetrack, Owensboro Racing and Gaming in Western Kentucky, and The Rose Gaming Resort in Northern Virginia. • Total liabilities increased $0.1 billion driven primarily by increased borrowings on our revolver and increased deferred income taxes, partially offset by decreased accrued capital expenditures and decreased deferred revenue due to the recognition of revenue related to the 150th Kentucky Derby. • Total shareholders’ equity increased $0.2 billion driven by net income and the addition of a redeemable noncontrolling interest, partially offset by share repurchases.
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.
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 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, the Company 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 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 Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the 2028 Indenture. 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.
Our consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates, judgments, and assumptions that we believe are reasonable based on our historical experience, contract terms, observance of known trends in our Company and the industry as a whole and information available from other outside sources.
Our consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates, judgments, and assumptions that we believe are reasonable based on our historical experience, contract terms, 42 observance of known trends in our Company and the industry as a whole and information available from other outside sources.
Evaluations of possible impairment require us to estimate, among other factors, forecasts of future operating results, revenue growth, operating expense, tax rates, start-up costs, capital expenditures, depreciation, working capital, discount rates, long-term growth rates, risk premiums, royalty rates, terminal values, and fair values of our reporting units and assets.
Evaluations of possible impairment require us to estimate, among other factors, forecasts of future operating results, revenue growth, operating expense, tax rates, start-up costs, capital expenditures, depreciation, working capital, 43 discount rates, long-term growth rates, risk premiums, royalty rates, terminal values, and fair values of our reporting units and assets.
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.
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 Existing 2028 Notes were issued at par, with interest payable on January 15 th and July 15 th of each year, commencing on July 15, 2018. The Company used the net proceeds from the offering to repay a portion of our $600.0 million 5.375% Senior Unsecured Notes due in 2021.
The Existing 2028 Notes were issued at par, with interest payable on January 15th and July 15th of each year, commencing on July 15, 2018. The Company used the net proceeds from the offering to repay a portion of our $600.0 million 5.375% Senior Unsecured Notes due in 2021.
The 2031 Senior Notes were issued at 100% of the principal amount, plus interest deemed to have accrued from April 25, 2023, with interest payable in arrears on May 1 st and November 1 st of each year, commencing on November 1, 2023. The 2031 Senior Notes will vote as one class under the indenture governing the 2031 Senior Notes.
The 2031 Senior Notes were issued at 100% of the principal amount, plus interest deemed to have accrued from April 25, 2023, with interest payable in arrears on May 1st and November 1st of each year, commencing on November 1, 2023. The 2031 Senior Notes will vote as one class under the indenture governing the 2031 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.
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 15th and July 15th 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.
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
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
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 2027 Senior Notes were issued at par, with interest payable on April 1st and October 1st 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.
Our Business Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby.
Our Business Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for over 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby.
Presque Isle Impairment During the quarter ended June 30, 2023, the Company evaluated economic conditions subsequent to the date of our annual impairment assessment on April 1, 2023, including competition in the market and inflationary pressures, which increased during the second quarter of 2023, and impacted the performance and outlook of Presque Isle Downs and Casino ("Presque Isle").
Other Business Activities Impairment During the quarter ended June 30, 2023, the Company evaluated economic conditions subsequent to the date of our annual impairment assessment on April 1, 2023, including competition in the market and inflationary pressures, which increased during the second quarter of 2023, and impacted the performance and outlook of Presque Isle Downs and Casino ("Presque Isle").
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.
Assessments of goodwill and intangible assets We perform our annual review for impairment of goodwill and indefinite-lived intangible assets on April 1st 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 following discussion provides an analysis of our results of operations and reasons for material changes therein for 2023 as compared to 2022.
The following discussion provides an analysis of our results of operations and reasons for material changes therein for 2024 as compared to 2023.
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.
Discussion regarding our financial condition and results of operations for 2023 as compared to 2022 is included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 21, 2024.
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.
As of December 31, 2024, we had approximately $3.2 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.
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. 2031 Senior Notes On April 25, 2023, the Company completed an offering of $600.0 million in aggregate principal amount of 6.750% senior unsecured notes that mature on April 25, 2031 (the "2031 Senior 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 2030 Senior Notes will vote as one class under the indenture governing the 2030 Senior Notes. 41 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. 2031 Senior Notes On April 25, 2023, the Company completed an offering of $600.0 million in aggregate principal amount of 6.75% senior unsecured notes that mature on April 25, 2031 (the "2031 Senior 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.
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for the following: Adjusted EBITDA includes our portion of EBITDA from our equity investments.
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for the following: Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to a noncontrolling interest.
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.
The Credit Agreement also contains financial covenants providing for the maintenance of a maximum consolidated secured net leverage ratio and maintenance of a minimum consolidated interest coverage ratio. 40 Actual as of December 31, 2024 Requirement Interest coverage ratio 3.9 to 1.0 > 2.5 to 1.0 Consolidated total secured net leverage ratio 1.3 to 1.0 The Company was compliant with all applicable covenants on December 31, 2024. 2027 Senior Notes On March 25, 2019, the Company 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.
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.
We currently expect our project capital to be approximately $350 to $400 million in 2025, although this amount may vary significantly based on the timing of work completed, unanticipated delays, and timing of payments to third parties.
The Credit Agreement contains certain customary affirmative and negative covenants, which include limitations on liens, investments, indebtedness, dispositions, mergers and acquisitions, the making of restricted payments, changes in the nature of business, changes in fiscal year, and transactions with affiliates.
The Credit Agreement is collateralized by substantially all the wholly owned assets of the Company. The Credit Agreement contains certain customary affirmative and negative covenants, which include limitations on liens, investments, indebtedness, dispositions, mergers and acquisitions, the making of restricted payments, changes in the nature of business, changes in fiscal year, and transactions with affiliates.
The 2030 Senior Notes were issued at 100% of the principal amount, plus interest deemed to have accrued from April 13, 2022, with interest payable in arrears on April 1 st and October 1 st of each year, commencing on October 1, 2022. The 2030 Senior Notes will vote as one class under the indenture governing the 2030 Senior Notes.
The 2030 Senior Notes were issued at 100% of the principal amount, plus interest deemed to have accrued from April 13, 2022, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1, 2022.
The repurchase program has no time limit and may be suspended or discontinued at any time. We had $214.9 million of repurchase authority remaining under this program on December 31, 2023.
The repurchase program has no time limit and may be suspended or discontinued at any time. We had $149.6 million of repurchase authority remaining under this program as of December 31, 2024.
The offering of the 2030 Senior Notes was part of the financing utilized for the P2E Transaction. In connection with the offering, we capitalized $18.3 million of debt issuance costs which are being amortized as interest expense over the term of the 2030 Senior Notes.
The offering of the 2030 Senior Notes was part of the financing utilized for the acquisition of substantially all of the assets of Peninsula Pacific Entertainment LLC. In connection with the offering, we capitalized $18.3 million of debt issuance costs which are being amortized as interest expense over the term of the 2030 Senior Notes.
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.
Exacta’s system architecture supports multiple game vendors and virtually unlimited math modeling capabilities on a single central determinant system enabling Exacta to deliver a diverse gaming library to Company owned and third-party HRM entertainment venues in Virginia, Kentucky, Wyoming, New Hampshire, and is expanding internationally.
Based on the 2023 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 recognized a non-cash impairment charge of $24.5 million in the second quarter of 2023 for the Presque Isle gaming rights and trademark.
As a result, 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 at the end of the second quarter. Based on the trigger event, the Company evaluated and subsequently updated the projected cash flows and discount rate to reflect the economic environment at that time.
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.
Partially offsetting these increases to cash from operating activities was increased interest paid and decreased distributions from our unconsolidated affiliates in 2024. 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.
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.
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 LLC.
These indicators include changes in net revenue, operating expense, operating income, earnings per share, outstanding debt balance, operating cash flow, and capital spend. Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). We also use non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization), and Adjusted EBITDA.
Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). We also use non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA.
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.
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.
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.
For the period ended December 31, 2024, the Company's commitment fee rate was 0.25%. 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.
On February 24, 2023, we amended our Credit Agreement to increase the loans under the Term Loan A due 2027 from $800.0 million to $1.3 billion and made certain other changes to the existing credit agreement.
Certain amendments to the Credit Agreement entered into during 2023, 2024, and 2025 are described below. On February 24, 2023, the Company closed an amendment of the Credit Agreement to increase the loans under the Term Loan A from $800.0 million to $1.3 billion and made certain other changes to the existing credit agreement.
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.
Stock Split Effective May 22, 2023, the Company's common stock was split two-for-one with a proportionate increase in the number of its authorized shares of common stock. For additional information, refer to Note 9, 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.
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.
We have spent $463.4 million in 2024 on project capital investments including: Churchill Downs Racetrack Paddock Project, the Terre Haute Casino Resort in Vigo County, Indiana, The Rose Gaming Resort in Northern Virginia, and Owensboro Racing & Gaming in Western Kentucky.
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 payment and amount of future dividends will be determined by the Board of Directors and will depend upon, among other things, our operating results, financial condition, cash requirements and general business conditions at the time such payment is considered. 39 Credit Facilities and Indebtedness The following table presents our debt outstanding, bond premium and debt issuance costs: As of December 31, Change (in millions) 2024 2023 Term Loan B-1 due 2028 $ 288.8 $ 291.8 $ (3.0) Term Loan A due 2029 1,172.4 1,235.0 (62.6) Revolver 377.5 247.2 130.3 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 4,938.7 4,874.0 64.7 Current maturities of long-term debt (63.1) (68.0) 4.9 Total debt, net of current maturities 4,875.6 4,806.0 69.6 Issuance cost and fees (31.5) (37.7) 6.2 Total debt $ 4,844.1 $ 4,768.3 $ 75.8 Credit Agreement At December 31, 2024, 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"), $288.8 million senior secured term loan B-1 due 2028 (the "Term Loan B-1"), $1.2 billion senior secured term loan A due 2029 (the "Term Loan A"), and $100.0 million swing line commitment.
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.
As a result, the Company recognized a non-cash impairment charge of $24.5 million in the second quarter of 2023 for the Presque Isle gaming rights and trademark. For additional information, refer to Note 7, 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.
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.
Arlington's results and exit costs in 2023 are treated as an adjustment. On June 26, 2023, the Company's management agreement for Lady Luck in Farmington, Pennsylvania expired and was not renewed. For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the Consolidated Statements of Comprehensive Income.
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.
Contractual Obligations Our commitments to make future payments as of December 31, 2024, are estimated as follows: (in millions) 2025 2026-2027 2028-2029 Thereafter Total Dividends $ 30.1 $ — $ — $ — $ 30.1 Revolver — — 377.5 — 377.5 Interest on Revolver (1) 22.8 45.6 34.5 — 102.9 Term Loan B-1 3.0 6.0 279.8 — 288.8 Interest on Term Loan B-1 (1) 18.8 37.1 3.9 — 59.8 Term Loan A 60.1 120.2 992.1 — 1,172.4 Interest on Term Loan A (1) 69.5 128.1 86.9 — 284.5 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 49.5 — — 82.5 Interest on 2028 Senior Notes 33.3 66.5 16.6 — 116.4 Interest on 2030 Senior Notes 69.0 138.0 138.0 34.5 379.5 Interest on 2031 Senior Notes 40.5 81.0 81.0 60.8 263.3 Operating and Finance Leases 11.0 19.4 14.5 30.2 75.1 All other 1.6 3.0 2.8 5.0 12.4 Total $ 392.7 $ 1,294.4 $ 2,727.6 $ 1,930.5 $ 6,345.2 (1) Interest includes the estimated contractual payments under our Credit Facility assuming no change in the weighted average borrowing rate of 6.04%, which was the rate in place as of December 31, 2024.
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.
Adjusted EBITDA excludes: • Transaction expense, net which includes: – Acquisition, disposition, and property sale related charges; – 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: – Legal reserves and transaction costs; • Asset impairments; • Gain on property sales; • Legal reserves; 32 • Pre-opening expense; and • Other charges, recoveries and expenses As of December 31, 2021, Arlington International Racecourse ("Arlington") ceased racing and simulcast operations and the property was sold on February 15, 2023 to the Chicago Bears.
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.
Financing Cash Flow Cash flows from financing activities decreased $325.9 million primarily driven by decreased net proceeds from long-term debt in 2024 compared to 2023 and by increased share repurchases in 2024. Capital Expenditures Included in cash flows from investing activities are capital maintenance expenditures and capital project expenditures.
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%.
The Company had $814.9 million available borrowing capacity, after consideration of $7.6 million in outstanding letters of credit, under the Revolver as of December 31, 2024. 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.
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.
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. As of December 31, 2024, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement.
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.
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) 2024 2023 Net revenue $ 2,734.3 $ 2,461.7 $ 272.6 Operating income 709.0 564.0 145.0 Operating income margin 25.9 % 22.9 % Net income attributable to Churchill Down Incorporated $ 426.8 $ 417.3 $ 9.5 Adjusted EBITDA 1,159.2 1,023.9 135.3 Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 • Net revenue increased $272.6 million driven by a $178.3 million increase from the Live and Historical Racing segment primarily from growth at our Virginia properties and the opening of the Rosie's Emporia HRM venue and The Rose Gaming Resort, a record-breaking Derby Week at Churchill Downs Racetrack, and growth at our other HRM venues, a $70.5 million increase from the Gaming segment primarily from the opening of the Terre Haute Casino Resort, and a $24.6 million increase from the Wagering Services and Solutions segment primarily from to our Exacta business.
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%.
We delivered strong growth in net revenue, operating income, net income, and Adjusted EBITDA compared to fiscal year 2023: • Net revenue was $2.7 billion, up $272.6 million or 11.1%; • Net income was $426.8 million, up $9.5 million or 2.3%; • Adjusted EBITDA was $1.2 billion, up $135.3 million, or 13.2%; • Cash from operations was $771.7 million, up $166.4 million or 27.5%.
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.
The Company’s five-year total shareholder return for 2024 was 97.6% compared to 94.9% for the Russell 1000 and 97.0% for the S&P 500. The preceding shareholder return calculations assume dividends are reinvested. We remain committed to delivering strong financial results and long-term sustainable growth.
The Company capitalized $3.5 million of debt issuance costs associated with the Revolver commitment increase and $6.4 million of debt issuance costs associated with the Term Loan A which are being amortized as interest expense over the 5-year term.
The Company has $5.7 million of capitalized unamortized debt issuance costs associated with the Term Loan A which are being amortized as interest expense over the remainder of the term. On February 14, 2025, the Company announced that it closed the seventh amendment of the Credit Agreement.
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.
Revenue by Segment The following table presents net revenue for our segments, including intercompany revenues: Years Ended December 31, Change (in millions) 2024 2023 Live and Historical Racing $ 1,267.0 $ 1,084.6 $ 182.4 Wagering Services and Solutions 500.7 458.4 42.3 Gaming 1,045.4 974.6 70.8 All Other 6.6 0.9 5.7 Eliminations (85.4) (56.8) (28.6) Net Revenue $ 2,734.3 $ 2,461.7 $ 272.6 Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 • Live and Historical Racing revenue increased $182.4 million due to a $57.2 million increase at Churchill Downs Racetrack due to a record-breaking 150th Derby Week, a $25.9 million increase in Northern Virginia including the opening of The Rose Gaming Resort, a $17.2 million increase from the opening of the Rosie’s Emporia HRM venue in Southern Virginia in September 2023, a $39.5 million increase from our other Virginia HRM venues, a $41.5 million increase from our Kentucky HRM venues, and a $1.1 million increase from our New Hampshire venue. • Wagering Services and Solutions revenue increased $42.3 million due to a $40.8 million increase from our Exacta business primarily from growth in our third party HRM business and from the growth of our Virginia HRM venues and a $2.0 million increase from our sports betting business, partially offset by a $0.5 million decrease from TwinSpires Ho rse Racing. • Gaming revenue increased $70.8 million primarily due to a $96.6 million increase from the opening of the Terre Haute Casino Resort.
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.
Dividends On October 22, 2024, the Company's Board of Directors approved an annual cash dividend on our common stock of $0.409 per outstanding share, which represented a 7% increase over the prior year. The dividend was payable on January 3, 2025 to shareholders of record as of the close of business on December 6, 2024.
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.
Lady Luck Casino Nemacolin Agreement In June 2023, the Company's management agreement for Lady Luck Casino Nemacolin ("Lady Luck") in Farmington, Pennsylvania expired and was not renewed. The Company completed the sale of substantially all its assets at Lady Luck for an immaterial amount.
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.
Headquartered in Louisville, Kentucky, CDI has expanded through the acquisition, development, and operation of live and historical racing entertainment venues, the growth of the online wagering businesses, and the acquisition, development, and operation of regional casino gaming properties. 2024 Transactions and Expansions The Rose Gaming Resort Opening In November 2024, the Company opened The Rose Gaming Resort approximately 30 miles south of Washington D.C.
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.
Excluding these items, net income increased $61.2 million primarily due to a $77.0 million after-tax increase primarily driven by the results of our operations and equity income from our unconsolidated affiliates, partially offset by a $15.8 million after-tax increase in interest expense associated with higher outstanding debt balances and higher interest rates. • Adjusted EBITDA increased $135.3 million driven by a $99.2 million increase from the Live and Historical Racing segment primarily from a record-breaking Derby Week at Churchill Downs Racetrack and growth at our HRM venues, a $33.5 million increase from the Wagering Services and Solutions segment primarily due to our Exacta business, and an $18.3 million increase from the Gaming segment primarily from the opening of the Terre Haute Casino Resort in April 2024 that was partially offset by inclement weather in January 2024, regional gaming softness, and increased competition.
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.
Year Ended December 31, Change (in millions) 2024 2023 Live and Historical Racing $ 574.6 $ 475.4 $ 99.2 Wagering Services and Solutions 165.6 132.1 33.5 Gaming 506.9 488.6 18.3 Total segment Adjusted EBITDA 1,247.1 1,096.1 151.0 All Other (87.9) (72.2) (15.7) Total Adjusted EBITDA $ 1,159.2 $ 1,023.9 $ 135.3 Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 • Live and Historical Racing Adjusted EBITDA increased $99.2 million due to a $32.6 million increase at Churchill Downs Racetrack due to a record-breaking 150th Derby Week, $9.7 million increase in Northern Virginia including the opening of The Rose Gaming Resort, a $7.1 million increase from the opening of the Rosie’s Emporia HRM venue in Southern Virginia in September 2023, a $38.3 million increase from our other Virginia HRM venues, and an $11.5 million increase primarily from our other Kentucky HRM venues. 36 • Wagering Services and Solutions Adjusted EBITDA increased $33.5 million due to a $29.2 million increase from our Exacta business because of increased fees from our Virginia HRM venues, a $2.2 million increase from a one-time reduction in accrued compensation expenses related to our Exacta business, and a $2.6 million increase primarily from our sports betting business, partially offset by a $0.5 million decrease from TwinSpires Horse Racing. • Gaming Adjusted EBITDA increased $18.3 million primarily due to a $44.5 million increase from the opening of the Terre Haute Casino Resort and a $3.0 million increase from our equity investment in Miami Valley Gaming.
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.
The expansion included a VIP gaming area, a new sports bar, a stage for live entertainment, and an upscale-casual restaurant and bar. 31 Arlington Sale On February 15, 2023, the Company closed on the sale of the Arlington property in Arlington Heights, Illinois. We sold 326-acres to the Chicago Bears for $197.2 million.
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.
All captive revenue is eliminated in consolidation. 35 Consolidated Operating Expense The following table is a summary of our consolidated operating expense: Years Ended December 31, Change (in millions) 2024 2023 Taxes and purses $ 662.9 $ 613.4 $ 49.5 Content expense 168.4 173.0 (4.6) Salaries and benefits 330.1 285.3 44.8 Selling, general and administrative expense 237.7 202.3 35.4 Depreciation and amortization 199.1 169.0 30.1 Marketing and advertising expense 90.7 83.4 7.3 Maintenance, insurance and utilities 95.2 88.9 6.3 Property and other taxes 23.0 26.4 (3.4) Asset impairments 3.9 24.6 (20.7) Transaction (benefit) expense, net (12.1) 4.8 (16.9) Other operating expense 226.4 226.6 (0.2) Total expense $ 2,025.3 $ 1,897.7 $ 127.6 Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Operating expenses increased $127.6 million for the year ended December 31, 2024 compared to December 31, 2023 primarily due to the Exacta Transaction in August 2023, the opening of Rosie's Emporia in September 2023, Derby City Gaming Downtown in December 2023, Terre Haute Casino Resort in Indiana in April 2024, and The Rose Gaming Resort in Virginia in November 2024.
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.
All Other: • We amended our senior secured credit agreement to extend the maturity date of our revolving credit facility and term loan A facility from 2027 to 2029 and to make certain other changes to our existing credit agreement. • We repurchased $65.3 million of shares under our share repurchase program in 2024, based on trade date. • We continued in our ESG efforts with 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 increasing engagement with our shareholders.
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.
Live and Historical Racing Segment: • Adjusted EBITDA was $574.6 million, up $99.2 million or 20.9% from fiscal year 2023. • Churchill Downs Racetrack: ◦ Churchill Downs Racetrack ran the 150th Kentucky Derby on the first Saturday of May, generating all-time record all-sources handle and all-time record Derby Week Adjusted EBITDA with nearly 157,000 fans gathered in person to watch the most exciting two minutes in sports. ◦ We successfully completed the transformative Paddock Project prior to the 150th Kentucky Derby.
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.
Investing Cash Flow Cash flows used in investing activities decreased $172.8 million primarily driven by decreased funds used in acquisitions and capital expenditures in 2024, partially offset by proceeds from the Arlington sale received in 2023.
Business Highlights In 2023, we delivered strong performance while continuing the execution of several organic investments.
See the Reconciliation of Net Income to Adjusted EBITDA included in this section for additional information. Business Highlights In 2024, we delivered strong performance while continuing the execution of several organic investments that we believe will provide long-term sustainable value creation.
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.
Partially offsetting these increases to operating income was a $35.4 million increase in selling, general and administrative expenses and a $0.2 million decrease in All Other operating income. • Net income attributable to Churchill Downs Incorporated increased $9.5 million.
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.
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, Wagering Services and Solutions, and Gaming. Refer to Part I, Item 1.
Transaction Update 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.
NYRA Transaction In April 2024, the Company closed on the sale of 49% of the United Tote Company (“United Tote”), a wholly owned subsidiary of CDI, to NYRA Content Management Solutions, LLC ("NYRA"), a subsidiary of the New York Racing Association, Inc. 2023 Transactions and Expansions Derby City Gaming Downtown Opening In December 2023, the Company opened Derby City Gaming Downtown in Louisville, Kentucky.
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.
The 7% increase marked the fourteenth consecutive year that the Company has increased the dividend.
Removed
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").
Added
The Company invested approximately $460 million to construct The Rose Gaming Resort with a 102-room hotel, eight food and beverage options, and 1,650 historical racing machines ("HRMs"). The Rose Gaming Resort has the potential to be expanded to up to 1,800 HRMs.
Removed
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.
Added
Terre Haute Casino Resort Opening In April 2024, the Company opened the Terre Haute Casino Resort in Terre Haute, Indiana. The Company invested approximately $290 million to develop the Terre Haute Casino Resort with a luxury hotel, 1,040 slot machines, 36 tables games, a state-of-the-art sportsbook, and regionally inspired food and beverage amenities.
Removed
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.
Added
The Company invested approximately $90 million to develop Derby City Gaming Downtown with a gaming area, a main-level sports bar with a stage for live entertainment, retail sports betting, a premium bourbon bar, and an elegant wine lounge for guests, including locals, tourists, and convention attendees.
Removed
The P2E Transaction also included HRM development rights for two properties in Emporia, Virginia and Dumfries, Virginia. The Company invested $30.0 million in a seventh Virginia based HRM entertainment venue that opened on September 26, 2023 in Emporia, Virginia.
Added
Exacta Systems, LLC Acquisition On August 22, 2023, the Company completed its acquisition of Exacta Systems, LLC ("Exacta Transaction"). Exacta Systems, LLC ("Exacta") is a leading provider of central determinant system technology in HRMs across the country.
Removed
The Company is also investing approximately $460.0 million to construct The Rose Gaming Resort (“The Rose”) in Dumfries, Virginia with an expected completion late in the third quarter of 2024. Ellis Park Acquisition On September 26, 2022, the Company completed the acquisition of Ellis Park Racing & Gaming ("Ellis Park Transaction").
Added
Derby City Gaming & Hotel Expansion In June 2023, the Company invested approximately $78 million to expand the Derby City Gaming facility in Louisville, Kentucky and build a five-story hotel with 123 rooms including amenities to better serve and attract guests.
Removed
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.
Added
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. These indicators include changes in net revenue, operating expense, operating income, earnings per share, outstanding debt balance, operating cash flow and capital spend.
Removed
In June 2023, the 31 Company announced it planned to invest approximately $100 million in a new HRM entertainment venue on the east side of Owensboro, Kentucky with an expected completion in the first quarter of 2025.
Added
This multi-year project fundamentally improves the entire venue for every guest and provides a foundation to further innovate for years to come. ◦ We extended the agreement with NBC Sports to continue hosting the Kentucky Derby on NBC and Peacock through 2032. ◦ We announced the Starting Gate Pavilion and Courtyard renovation to be open for the 151st Kentucky Derby. • Kentucky HRMs: ◦ Owensboro Racing & Gaming: Constructed a new HRM entertainment venue that opened in February 2025 in Owensboro, Kentucky. ◦ Marshall Yards Racing & Gaming: Announced a new HRM entertainment venue near Paducah, Kentucky, that will open in the first quarter of 2026. • Virginia HRMs: ◦ The Rose Gaming Resort: Opened a world class entertainment resort in Dumfries, Virginia in November 2024 that includes 1,650 HRMs, eight bars and restaurants, and a hotel with over 100 rooms and event space. ◦ Richmond Expansion: Announced plans to further expand the Richmond, Virginia HRM venue by 450 HRMs. ◦ Roseshire Henrico County: Announced plans to open a new HRM entertainment venue in Henrico County, Virginia that will include 175 HRMs.
Removed
Chasers Poker Room Acquisition On September 2, 2022, the Company completed the acquisition of Chasers Poker Room ("Chasers") in Salem, New Hampshire ("Chasers Transaction"). Chasers is a charitable gaming facility located approximately 30 miles from Boston, Massachusetts that offers poker and a variety of table games.
Added
Wagering Services and Solutions Segment: • Adjusted EBITDA was $165.6 million, up $33.5 million or 25.4% from fiscal year 2023. • We expanded Exacta technology and product offerings to customers in new states and internationally. 33 • We monetized online sports betting market access in select states (Indiana, Kentucky, and Pennsylvania) with third parties.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeGeneral 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.
Biggest changeGeneral economic trends Our business is sensitive to consumer confidence and reductions in consumers' discretionary spending, which may result from challenging economic conditions, interest rate fluctuations, 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, 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.
On December 31, 2024, 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.
Assuming 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
Assuming 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 $13.3 million. 45

Other CHDN 10-K year-over-year comparisons