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What changed in Canterbury Park Holding Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Canterbury Park Holding Corp'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.

+203 added−191 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-12)

Top changes in Canterbury Park Holding Corp's 2024 10-K

203 paragraphs added · 191 removed · 155 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

56 edited+10 added−11 removed81 unchanged
Biggest changeThe land was used for the development of a 147-unit senior living community with initial occupancy beginning during the fourth quarter of 2023. ○ Finally, during the fourth quarter of 2022, C anterbury DBSV sold approximately 1.7 acres of land to A&M Kerber Holdings, LLC for total consideration of approximately $925,000 for the construction of a Next Steps Learning Center and child care facility, which began operations during the fourth quarter of 2023. 7 ● In April 2020, Canterbury Development entered into two agreements to sell approximately 14 acres of land on the west side of the Racetrack to Pulte Homes of Minnesota ("Pulte") and Lifestyle Communities for total consideration of approximately $3,500,000.
Biggest changeIn addition, Canterbury Development is guaranteed an annual 6% preferred return on the balance of Canterbury Development's undistributed base capital. ● In April 2020, Canterbury Development entered into two agreements to sell approximately 14 acres of land on the west side of the Racetrack to Pulte Homes of Minnesota (“Pulte”) and Lifestyle Communities for total consideration of approximately $3,500,000.
Overview Canterbury Park Holding Corporation (the “Company,” “we,” “our,” or “us”) is the holding company for and parent company of two subsidiaries, Canterbury Park Entertainment LLC (“Canterbury Entertainment”) and Canterbury Development (“Canterbury Development”) and an indirect subsidiary Canterbury Park Concessions, Inc. which is wholly-owned by Canterbury Entertainment.
Overview Canterbury Park Holding Corporation (the “Company,” “we,” “our,” or “us”) is the holding company for and parent company of two subsidiaries, Canterbury Park Entertainment LLC (“Canterbury Entertainment”) and Canterbury Development LLC (“Canterbury Development”) and an indirect subsidiary Canterbury Park Concessions, Inc. which is wholly-owned by Canterbury Entertainment.
Groundwork on the Doran Canterbury II site began in October 2020, paving the way for the ground-up construction of the second phase of apartments, which began construction in March 2022 with initial occupancy occurring in January 2024. ○ As a result of these joint ventures, Canterbury Development holds a 27.4% equity interest in Doran Canterbury I, LLC governed by an operating agreement effective as of March 1, 2018 with Doran Shakopee LLC, and Canterbury Development also holds a 27.4% equity interest in Doran Canterbury II, LLC governed by an operating agreement effective as of July 30, 2020 with Doran Shakopee LLC and amended October 1, 2021. ● On June 16, 2020, Canterbury Development, entered into an operating agreement with an affiliate of Greystone Construction ("Greystone"), as the two members of a Minnesota limited liability company named Canterbury DBSV Development, LLC ("Canterbury DBSV").
Groundwork on the Doran Canterbury II site began in October 2020, paving the way for the ground-up construction of the second phase of apartments, which began construction in March 2022 with initial occupancy occurring in January 2024. ○ As a result of these joint ventures, Canterbury Development holds a 27.4% equity interest in Doran Canterbury I, LLC governed by an operating agreement effective as of March 1, 2018 with Doran Shakopee LLC, and Canterbury Development also holds a 27.4% equity interest in Doran Canterbury II, LLC governed by an operating agreement effective as of July 30, 2020 with Doran Shakopee LLC and amended October 1, 2021. ● On June 16, 2020, Canterbury Development, entered into an operating agreement with an affiliate of Greystone Construction ( “ Greystone ” ), as the two members of a Minnesota limited liability company named Canterbury DBSV Development, LLC ( “ Canterbury DBSV ” ).
The building is programmed with over 5,000 square feet of amenity spaces and outdoor spaces. ● In September 2021, the Company entered into a purchase agreement to sell approximately 37 acres of land on the northeast corner of the Racetrack to Minneapolis-based Swervo Development Corporation ("Swervo"). Swervo intends to construct a state-of-the-art amphitheater as part of the Canterbury Commons development.
The building is programmed with over 5,000 square feet of amenity spaces and outdoor spaces. ● In September 2021, the Company entered into a purchase agreement to sell approximately 37 acres of land on the northeast corner of the Racetrack to Minneapolis-based Swervo Development Corporation (“Swervo”). Swervo intends to construct a state-of-the-art amphitheater as part of the Canterbury Commons development.
Unbanked card games, in which patrons compete against each other instead of the house, are hosted in the Casino at the Racetrack. The Casino has historically operated 24 hours a day, seven days a week and has offered both poker and table games at up to 80 tables as allowed by Minnesota statute.
Unbanked card games, in which patrons compete against each other instead of the house, are also hosted in the Casino at the Racetrack. The Casino has historically operated 24 hours a day, seven days a week and has offered both poker and table games at up to 80 tables as allowed by Minnesota statute.
In connection with it's contribution, Canterbury DBSV became a 45.87% equity member in GS Moving Up, LLC. The land was used for the development of a new 28,000 square foot office building, with Greystone occupying the second floor as its corporate headquarters.
In connection with its contribution, Canterbury DBSV became a 45.87% equity member in GS Moving Up, LLC. The land was used for the development of a new 28,000 square foot office building, with Greystone occupying the second floor as its corporate headquarters.
Our event space has been used for craft shows, trade shows, pool and poker tournaments, automobile and other utility vehicle shows, major art shows, and fundraisers. Our outdoor spaces have been used for concerts, snowmobile races, and other competitions. The infield of the Racetrack has also been used as a concert and event area.
Our event space has been used for craft shows, trade shows, pool and poker tournaments, automobile and other utility vehicle shows, major art shows, and fundraisers. Our outdoor spaces have been used for concerts, snowmobile races, a rodeo, and other competitions. The infield of the Racetrack has also been used as a concert and event area.
We have seen and continue to see industry-wide labor shortages causing challenges in hiring or re-hiring for certain positions. In response, we have enhanced our recruitment and retention efforts and increased compensation where needed to maintain competitiveness in this extremely difficult market.
We have seen and continue to see industry-wide labor shortages causing challenges in hiring or re-hiring for certain positions. In response, we have enhanced our recruitment and retention efforts and increased compensation where needed to maintain competitiveness in this difficult market.
The primary source of poker revenue the Company collects is a “rake” of 5-10%, depending on the limit of the game, of the poker pot up to a maximum of $4 per hand. In addition, poker games offer progressive jackpots for most games.
The primary source of poker revenue the Company collects is a “rake” of 5-10%, depending on the limit of the game, of the poker pot up to a maximum of $5 per hand. In addition, poker games offer progressive jackpots for most games.
If sports betting were legalized in Minnesota for tribal casinos and through mobile applications operated by the tribes, we would experience increased competition from the tribal casinos which could divert customers from our Casino and Racetrack and thus adversely affect our financial condition, results of operations, and cash flows. 8 The Company also faces indirect competition from a variety of sources for discretionary consumer spending including spectator sports and other entertainment and gaming options.
If sports betting were legalized in Minnesota for tribal casinos and through mobile applications operated by the tribes, we would experience increased competition from the tribal casinos which could divert customers from our Casino and Racetrack and thus adversely affect our financial condition, results of operations, and cash flows. 6 The Company also faces indirect competition from a variety of sources for discretionary consumer spending including spectator sports and other entertainment and gaming options.
The following is a summary of our real estate development projects within Canterbury Commons as of December 31, 2023: ● Our first real estate development project in Canterbury Commons began in 2018 with Doran Canterbury I, LLC, a joint venture between Canterbury Development and an affiliate of Doran Companies (“Doran”) for the development of the upscale Triple Crown Residences at Canterbury Park. ○ In September 2018, Canterbury Development contributed approximately 13 acres of land as its equity contribution in the Doran Canterbury I, LLC joint venture and became a 27.4% equity member.
The following is a summary of our real estate development projects within Canterbury Commons as of December 31, 2024 : ● Our first real estate development project in Canterbury Commons began in 2018 with Doran Canterbury I, LLC, a joint venture between Canterbury Development and an affiliate of Doran Companies (“Doran”) for the development of the upscale Triple Crown Residences at Canterbury Park. ○ In September 2018, Canterbury Development contributed approximately 13 acres of land as its equity contribution in the Doran Canterbury I, LLC joint venture and became a 27.4% equity member.
A federal statute, the Interstate Horse Racing Act of 1978, also requires that a racetrack must obtain the consent of the group representing the horsepersons (owners and trainers) racing the breed of horses that race a majority of the time at the racetrack (which is the MHBPA), and the consent of the state agency regulating the racetrack (in Minnesota, the MRC), in order to transmit simulcast signals of its live races or to receive and use simulcast signals from other racetracks.
A federal statute, the Interstate Horse Racing Act of 1978, also requires that a racetrack must obtain the consent of the group representing the horsepersons (owners and trainers) racing the breed of horses that race a majority of the time at the racetrack (which is the MNHBPA), and the consent of the state agency regulating the racetrack (in Minnesota, the MRC), in order to transmit simulcast signals of its live races or to receive and use simulcast signals from other racetracks.
The Company faces direct competition from Running Aces Harness Park ("Running Aces") in Columbus Township, Anoka County, Minnesota, a racetrack and card room that is located approximately 40 miles from Canterbury Park. Running Aces offers pari-mutuel wagering on live races of standardbred (“harness”) horses on a seasonal basis and year-round wagering on simulcasting of all breeds of horse races.
The Company faces direct competition from Running Aces Harness Park (“Running Aces”) in Columbus Township, Anoka County, Minnesota, a racetrack and card room that is located approximately 40 miles from Canterbury Park. Running Aces offers pari-mutuel wagering on live races of standardbred (“harness”) horses on a seasonal basis and year-round wagering on simulcasting of all breeds of horse races.
Currently, the fee for the Class B License is $500 for each assigned race day on which live racing is actually conducted and $100 for each day on which simulcasting is authorized and actually takes place. 9 In addition, the law requires that the Company reimburse the MRC for actual costs, including stewards, state veterinarians and drug testing, related to the regulating of live racing.
Currently, the fee for the Class B License is $500 for each assigned race day on which live racing is actually conducted and $100 for each day on which simulcasting is authorized and actually takes place. 7 In addition, the law requires that the Company reimburse the MRC for actual costs, including stewards, state veterinarians and drug testing, related to the regulating of live racing.
The Company anticipates more opportunity and focus in the entertainment, office, retail, and hospitality segments in the later phases of the Canterbury Commons development. Canterbury expects to make additional announcements of new partners for this phase in the future. See footnote 12 of the consolidated financial statements for more detailed information on recent transactions and development activity.
The Company anticipates more opportunity and focus in the entertainment, office, retail, and hospitality segments in the later phases of the Canterbury Commons development. Canterbury expects to make additional announcements of new partners for this phase in the future. See footnote 11 of the consolidated financial statements for more detailed information on recent transactions and development activity.
In connection with its contribution, Canterbury Development became a 61.87% equity member in Canterbury DBSV. ○ During the fourth quarter of 2020, Canterbury DBSV transferred approximately 1.5 a cres of land as an equity contribution into another joint venture, called GS Moving Up, LLC, a Minnesota limited liability company.
In connection with its contribution, Canterbury Development became a 61.87% equity member in Canterbury DBSV. ○ During the fourth quarter of 2020, Canterbury DBSV transferred approximately 1.5 acres of land as an equity contribution into another joint venture, called GS Moving Up, LLC, a Minnesota limited liability company.
(Nasdaq:PEGY), a growing domestic operator and consolidator of residential solar, battery storage, and grid service solutions based in Minnetonka, Minnesota. Randy J. Dehmer was hired as Vice President of Finance and Chief Financial Officer in May 2019, and promoted to Senior Vice President of Finance in September 2021. Mr.
(Nasdaq:PEGY), a growing domestic operator and consolidator of residential solar, battery storage, and grid service solutions based in Minnetonka, Minnesota, until 2024. Randy J. Dehmer was hired as Vice President of Finance and Chief Financial Officer in May 2019, and promoted to Senior Vice President of Finance in September 2021. Mr.
Under federal and state law, in order to conduct simulcast operations either as a host or guest track, the Company must obtain the consent of the MRC and the MHBPA as the organization that represents a majority of the owners and trainers of the horses who race at the Racetrack.
Under federal and state law, in order to conduct simulcast operations either as a host or guest track, the Company must obtain the consent of the MRC and the MNHBPA as the organization that represents a majority of the owners and trainers of the horses who race at the Racetrack.
At the Racetrack, various aspects of our operations are subject to approval by the MRC and the organization that represents a majority of the owners and trainers of the horses who race at the Racetrack, which is the Minnesota Horsemen’s Benevolent and Protective Association (“MHBPA”).
At the Racetrack, various aspects of our operations are subject to approval by the MRC and the organization that represents a majority of the owners and trainers of the horses who race at the Racetrack, which is the Minnesota Horsemen’s Benevolent and Protective Association (“MNHBPA”).
As these consents are obtained annually, no assurance can be given that the MRC and the MHBPA will allow the Company to conduct simulcast operations either as a host or guest track in future years.
As these consents are obtained annually, no assurance can be given that the MRC and the MNHBPA will allow the Company to conduct simulcast operations either as a host or guest track in future years.
He has been active in horse industry associations, currently serving as Director of the Thoroughbred Racetracks of America and is a past Vice President of the Thoroughbred Racetracks of America and past President of the Minnesota Thoroughbred Association. Mr. Sampson also currently serves as a director of Pineapple Energy Inc.
He has been active in horse industry associations, currently serving as Director of the Thoroughbred Racetracks of America and is a past Vice President of the Thoroughbred Racetracks of America and past President of the Minnesota Thoroughbred Association. Mr. Sampson also served as a director of Pineapple Energy Inc.
If either the MRC or the MHBPA do not consent, the Company’s operations could be adversely affected by a decrease in pari-mutuel revenue, lower attendance, and lower overall handle. 5 Casino Operations The Casino may offer gaming 24 hours per day, seven days per week, and offers two forms of unbanked card games: poker and table games.
If either the MRC or the MNHBPA do not consent, the Company’s operations could be adversely affected by a decrease in pari-mutuel revenue, lower attendance, and lower overall handle. Casino Operations The Casino may offer gaming 24 hours per day, seven days per week, and offers two forms of unbanked card games: poker and table games.
In 2023, Canterbury Development continued to pursue various development opportunities for the underutilized land in a project known as Canterbury Commons™. Canterbury Development continues to pursue various mixed use development opportunities, such as residential development, office, restaurants, hotel, entertainment, and retail operations.
In 2024, Canterbury Development continued to pursue various development opportunities for the underutilized land in a project known as Canterbury Commons™. Canterbury Development continues to pursue various mixed use development opportunities, such as residential development, office, restaurants, hotel, entertainment, and retail operations.
Table games, including Blackjack, Mississippi Stud, Fortune Pai Gow, Three Card Poker, Four Card Poker, Ultimate Texas Hold ‘Em, EZ Baccarat, Criss Cross Poker, Free Bet Blackjack, DJ Wild, and I Luv Suits, with betting limits ranging between $1 and $300, are currently offered in our Casino.
Table games, including Blackjack, Mississippi Stud, Fortune Pai Gow, Three Card Poker, Four Card Poker, Ultimate Texas Hold ‘Em, EZ Baccarat, Criss Cross Poker, Free Bet Blackjack, DJ Wild, Double Down Madness Blackjack, and I Luv Suits, with betting limits ranging between $1 and $300, are currently offered in our Casino.
The balance of the takeout remaining after these deductions is commonly referred to as the “retainage.” While the Minnesota Racing Act regulates that a minimum of 8.4% of the live racing handle be paid as purses to the owners of the horses, purse contributions are governed by an agreement that we negotiate annually with the MHBPA and the Minnesota Quarter Horse Racing Association ("MQHRA").
The balance of the takeout remaining after these deductions is commonly referred to as the “retainage.” While the Minnesota Racing Act regulates that a minimum of 8.4% of the live racing handle be paid as purses to the owners of the horses, purse contributions are governed by an agreement that we negotiate annually with the MNHBPA and the Minnesota Quarter Horse Racing Association (“MQHRA”).
The closing of phase two of the Pulte transaction and the sale of the remaining 4.2 acres occurred in June 2022. ○ Development approvals by Pulte on 109 new for sale row homes and townhome residences at Canterbury C ommons was completed in late 2020.
The closing of phase two of the Pulte transaction and the sale of the remaining 4.2 acres occurred in June 2022. ○ Development approvals by Pulte on 109 new for sale row homes and townhome residences at Canterbury Commons was completed in late 2020.
Sports Betting The Minnesota legislature is continuing to consider bills to legalize sports betting in Minnesota at tribal casinos and online through mobile applications operated by the tribes. It is not certain whether any of these bills will be adopt ed into law.
Sports Betting The Minnesota legislature is continuing to consider bills to legalize sports betting in Minnesota at tribal casinos and online through mobile applications operated by the tribes. It is not certain whether any of these bills will be adopted into law.
We believe this $1 5 million barn area redevelopment project will continue the Company’s ongoing commitment to provide quality horse racing in the state of Minnesota as well as allow for future development of Canterbury’s underutilized land.
We believe this $15 million barn area redevelopment project will continue the Company’s ongoing commitment to provide quality horse racing in the State of Minnesota as well as allow for future development of Canterbury’s underutilized land.
Pulte has initiated ground up construction of a number of townhome buildings and its first model units were completed in the first quarter of 2022 with approximately 50 townhomes occupied as of December 31, 2023. Lifestyle Communities will be a 44-unit age restricted active senior cooperative community.
Pulte has initiated ground up construction of a number of townhome buildings and its first model units were completed in the first quarter of 2022 with approximately 84 townhomes occupied as of December 31, 2024 . Lifestyle Communities will be a 44-unit age restricted active senior cooperative community.
The Company competes with a number of tribal casinos in the State of Minnesota that offer video slot machines, table games, and both banked and unbanked card games, including Minnesota’s largest casino, Mystic Lake, which is located approximately four miles from the Racetrack and which is owned by the SMSC.
The Company competes with a number of tribal casinos in the State of Minnesota that offer video slot machines, table games, and both banked and unbanked card games, including Minnesota’s largest casino, Mystic Lake, which is located approximately four miles from the Racetrack and which is owned by the Shakopee Mdewakanton Sioux Community ("SMSC").
In addition to event space, we have offered space in our horse stable area for rent for boat storage during the winter months. 6 Development Operations Beginning in 2015, we began executing our development plan for Company land that was not necessary to conduct our Racetrack Operations (grandstand, racetrack, stable area, and parking areas) and land for other facilities, including the event center.
In addition to event space, we have offered space in our horse stable area for rent for boat storage during the winter months and recreational vehicle storage during the summer months. 4 Development Operations Beginning in 2015, we began executing our development plan for Company land that was not necessary to conduct our Racetrack Operations (grandstand, racetrack, stable area, and parking areas) and land for other facilities, including the event center.
The ADW source market revenue to the Company totaled approximately $1,331,000 and $1,511,000 for the fiscal years ended December 31, 2023 and 2022 , respectively. As part of the agreement, 50% of source market fees is allocated to purse accounts and the MBF.
The ADW source market revenue to the Company totaled approximately $1,288,000 and $1,331,000 for the fiscal years ended December 31, 2024 and 2023 , respectively. As part of the agreement, 50% of source market fees is allocated to purse accounts and the MBF.
Dehmer also currently serves as a director on the Shakopee Chamber of Commerce board. 12
Dehmer also currently serves as a director on the Shakopee Chamber of Commerce board. 9
As of December 31, 2023, Canterbury Development has contributed approximately 36 acres of l and to three, separate joint ventures described below. In addition, we have sold several parcels of land, totaling approximately 50 acres, to third parties that have and will develop the property as described below.
As of December 31, 2024 , Canterbury Development has contributed approximately 40 acres of land to four, separate joint ventures described below. In addition, we have sold several parcels of land, totaling approximately 50 acres, to third parties that have and will develop the property as described below.
Al though we will have no continuing ownership in these land sales, we believe the future developments of this property will contribute to the overall vitality of Canterbury Commons and drive visitation and spend to Canterbury Park.
Although we will have no continuing ownership in these land sales, we believe the future developments of these properties will contribute to the overall vitality of Canterbury Commons and drive visitation and spend to Canterbury Park.
Executive Officers The executive officers of the Company, their ages and their positions with the Company at March 15, 2024 are as follows: Name Age Position with Company Randall D. Sampson 65 President, CEO, and Chairman of the Board Randy J. Dehmer 41 Senior Vice President of Finance and CFO Randall D.
Executive Officers The executive officers of the Company, their ages and their positions with the Company at March 11, 2025 are as follows: Name Age Position with Company Randall D. Sampson 66 President, CEO, and Chairman of the Board Randy J. Dehmer 42 Senior Vice President of Finance and CFO Randall D.
The most recent survey was conducted in 2022 and reflected an engagement level among our team members that exceeded the average engagement levels of benchmarked companies. The Company intends to complete a similar survey in late 2024. Health and Safety During 2022 and 202 3, we continued to focus significant attention to enhancing health and safety protocols.
The most recent survey was conducted in 2024 and reflected an engagement level among our team members that exceeded the average engagement levels of benchmarked companies. Health and Safety During 2024, we continued to focus significant attention to enhancing health and safety protocols.
The law requires that the Company reimburse the MRC for its actual costs, including personnel costs, of regulating the Casino. For fiscal years ended December 31, 2023 and 2022 , the Compa ny paid $297,000 and $248,000, respec tively, to the MRC as reimbursement for costs of regulating Casino operations.
The law requires that the Company reimburse the MRC for its actual costs, including personnel costs, of regulating the Casino. For fiscal years ended December 31, 2024 and 2023 , the Company paid $356,000 and $297,000, respectively, to the MRC as reimbursement for costs of regulating Casino operations.
In 2023, the Company had one day of live racing cancell ed and two othe r days shortened due to inclement weather. In 2022, the Company had one day of live racing cancelled due to inclement weather.
In 2023, the Company had one day of live racing cancelled and two other days shortened due to inclement weather.
For fiscal years ended December 31, 2023 and 2022 , the Com pany paid $497,000 and $152,000, respectively, to the MRC as reimbur sement for costs of regulating live racing operations. The MRC is also authorized by the Racing Act to regulate Casino operations.
For fiscal years ended December 31, 2024 and 2023 , the Company paid $555,000 and $497,000, respectively, to the MRC as reimbursement for costs of regulating live racing operations. The MRC is also authorized by the Racing Act to regulate Casino operations.
The closing of the land sale took place in April 2023 for approximately $8,800,000 in total consideration. In late 2023, Swervo broke ground and construction is underway on the amphitheater which is expected to open in 2025.
The closing of the land sale took place in April 2023 for approximately $8,800,000 in total consideration. In late 2023, Swervo broke ground and construction is underway on the amphitheater. In connection with the land sale and amphitheater development, Canterbury received approval for a three-phase barn relocation and redevelopment plan which is expected to be completed in 2025.
The land was used for the development of a new 11,000 square foot building that is occupied by a local restaurant and brewery, both of which began operations in July 2023. ○ Additionally , during the first quarter of 2022, Canterbury DBSV transferred approximately 3.5 acres of land as an equity contribution into another joint venture, called Omry Canterbury, LLC, a Minnesota limited liability company.
The land was used for the development of a new 11,000 square foot building that is occupied by a local restaurant and brewery, both of which began operations in July 2023. ○ During the fourth quarter of 2022, Canterbury DBSV sold approximately 1.7 acres of land to A&M Kerber Holdings, LLC for total consideration of approximately $925,000 for the construction of a Next Steps Learning Center and child care facility, which began operations during the fourth quarter of 2023. ○ During the first quarter of 2024, Canterbury DBSV transferred approximately 1.6 acres of land as an equity contribution into another joint venture, called Starting Gate, LLC, a Minnesota limited liability company.
Also, any development of the Racetrack site and Canterbury Commons is, among other things, subject to applicable zoning ordinances and requires approval by the City of Shakopee and other authorities. There can be no assurance these approvals will be obtained for any future development the Company proposes.
Also, any development of the Racetrack site and Canterbury Commons is, among other things, subject to applicable zoning ordinances and requires approval by the City of Shakopee and other authorities.
The Company is able to offer simulcast racing seven days a week, 364 days a year from racetracks around the world, in cluding Churchill Downs, Santa Anita, Gulfstream Park, Belmont Park, Saratoga Racecourse, and Dubai.
The Company is able to offer simulcast racing seven days a week, 364 days a year from racetracks around the world, including Churchill Downs, Santa Anita, Gulfstream Park, Belmont Park, Saratoga Racecourse, and Dubai. In addition, races of national interest, such as the Kentucky Derby, the Preakness Stakes, the Belmont Stakes, and the Breeders’ Cup supplement the regular simulcast program.
In addition, other revenues, which are principally derived from the three activities noted above, represented 9.1% of total net revenues for the year ended December 31, 2023. 3 Horse Racing Operations The Company’s horse racing operations consist of year-round simulcasting of horse races from around the U.S. and internationally and wagering on live thoroughbred and quarter horse races (“live meets”) held on a seasonal basis beginning in May and generally concluding in September each year.
Horse Racing Operations The Company’s horse racing operations consist of year-round simulcasting of horse races from around the U.S. and internationally and wagering on live thoroughbred and quarter horse races (“live meets”) held on a seasonal basis beginning in May and generally concluding in September each year.
Canterbury Entertainment is the direct owner of all land, facilities, and substantially all other assets related to our pari-mutuel wagering, Casino, concessions, and other related businesses (“Racetrack Operations”), and is subject to direct regulation by the MRC. We own approximately 260 acres of land as of December 31, 2023, in Shakopee, Minnesota where the Racetrack is located.
Canterbury Entertainment is the direct owner of all land, facilities, and substantially all other assets related to our pari-mutuel wagering, Casino, concessions, and other related businesses (“Racetrack Operations”), and is subject to direct regulation by the MRC. Canterbury Development is the direct owner of all land used in the real estate development operations.
If sports betting were legalized in Minnesota for tribal casinos and through mobile applications operated by the tribes, we would experience increased competition from the tribal casinos which could divert customers from our Casino and Racetrack and thus adversely affect our financial condition, results of operations, and cash flows. 10 Local Regulation The Company’s operations are subject to state and local laws, regulations, ordinances, and other provisions affecting zoning, public health, and other matters that may have the effect of restricting the uses to which the Company’s land and other assets may be used.
If sports betting were legalized in Minnesota for tribal casinos and through mobile applications operated by the tribes, we would experience increased competition from the tribal casinos which could divert customers from our Casino and Racetrack and thus adversely affect our financial condition, results of operations, and cash flows.
Net revenues from pari-mutuel wagering on live races run at the Racetrack consist of the total amount wagered, less the amounts paid (i) to winning patrons, (ii) for purses, (iii) to the MBF, and (iv) for pari-mutuel taxes to the State of Minnesota.
The current pari-mutuel tax applicable to wagering on all simulcast and live races is 6% of takeout in excess of $12 million during the twelve-month period beginning July 1 and ending the following June 30. 3 Net revenues from pari-mutuel wagering on live races run at the Racetrack consist of the total amount wagered, less the amounts paid (i) to winning patrons, (ii) for purses, (iii) to the MBF, and (iv) for pari-mutuel taxes to the State of Minnesota.
The project was completed in the 2021 third quarter, and a lease was executed for the majority of the space resulting in 90% building occupancy. ○ During the fourth quarter of 2022, Canterbury DBSV transferred 1.5 acres of land as an equity contribution into another joint venture, called SW Gateway, LLC, a Minnesota limited liability company.
The project was completed in the 2021 third quarter. ○ During the first quarter of 2022, Canterbury DBSV transferred approximately 3.5 acres of land as an equity contribution into another joint venture, called Omry Canterbury, LLC, a Minnesota limited liability company. In connection with its contribution, Canterbury DBSV became a 16.2% equity member in Omry Canterbury, LLC.
In addition, races of national interest, such as the Kentucky Derby, the Preakness Stakes, the Belmont Stakes, and the Breeders’ Cup supplement the regular simulcast program. The Company regularly evaluates its agreements with other racetracks to offer the most popular simulcast signals of live horse racing that are reasonably available.
The Company regularly evaluates its agreements with other racetracks to offer the most popular simulcast signals of live horse racing that are reasonably available.
The Company pays 28% of the collected revenues to another Minnesota-based horse track, records the remaining 72% as revenues, and records expenses of at least 50% for purses and breeders’ awards. 4 Live Racing For the years ended December 31, 2023 and 2022, the Racetrack hos ted 53 and 64 d ays of live racing, respectively, beginning in May and concluding in September.
The Company pays 28% of the collected revenues to another Minnesota-based horse track, records the remaining 72% as revenues, and records expenses of at least 50% for purses and breeders’ awards.
The Company adds approximately 350 team members on a seasonal basis for live racing operations from early May until early September.
Human Capital and Team Members Talent Management At December 31, 2024 , the Compa ny had 226 full-time team members and 525 part-time team members. T he Company adds approximately 350 team members on a seasonal basis for live racing operations from early May until early September.
These measures could themselves have an adverse effect because higher prices and diminished service levels may discourage customers from visiting the Racetrack. Marketing The Company’s primary market is the seven-county Minneapolis-Saint Paul metropolitan area (Hennepin, Ramsey, Anoka, Washington, Dakota, Scott, and Carver) plus the two counties to the south of the Racetrack and Casino (Le Sueur and Rice).
There can be no assurance these approvals will be obtained for any future development the Company proposes. 8 Marketing The Company’s primary market is the seven-county Minneapolis-Saint Paul metropolitan area (Hennepin, Ramsey, Anoka, Washington, Dakota, Scott, and Carver) plus the two counties to the south of the Racetrack and Casino (Le Sueur and Rice).
This includes delivering great customer service, developing new food and beverage offerings, creating fan education programs, and providing entertainment opportunities that go beyond the traditional pari-mutuel wagering and card playing activities. 11 Human Capital and Team Members Talent Management At December 31, 2023, the Company had 227 full-time team members and 538 part-time team members.
The Company continues to focus on creating a premier guest experience as the core element of its marketing efforts. This includes delivering great customer service, developing new food and beverage offerings, creating fan education programs, and providing entertainment opportunities that go beyond the traditional pari-mutuel wagering and card playing activities.
Traditionally, our revenues have been principally derived from three activities: Casino operations, pari-mutuel operations, and food and beverage operations. For the year ended December 31, 2023, revenues from Casino operations represented 64.8% of total net revenues, wagering on horse races represented 13.4% of total net revenues, and food and beverage revenue represented 12.7% of total net revenues.
For the year ended December 31, 2024 , revenues from Casino operations represented 63.0% of total net revenues, wagering on horse races represented 13.4% of total net revenues, and food and beverage revenue represented 12.9% of total net revenues. These components of revenue are described in more detail below.
In conn ection with its contribution, Canterbury DBSV be came a 16.2% equity m ember in Omry Canterbury, LLC.
In connection with its contribution, Canterbury DBSV became a 47.77% equity member in Starting Gate, LLC.
Removed
These components of revenue are described in more detail below.
Added
We own approximately 260 acres of land as of December 31, 2024 , in Shakopee, Minnesota where the Racetrack is located. Traditionally, our revenues have been principally derived from three activities: Casino operations, pari-mutuel operations, and food and beverage operations.
Removed
In addition, the MBF receives 1% of the handle. The current pari-mutuel tax applicable to wagering on all simulcast and live races is 6% of takeout in excess of $12 million during the twelve-month period beginning July 1 and ending the following June 30.
Added
In addition, other revenues, which are principally derived from the three activities noted above, represented 10.7% of total net revenues for the year ended December 31, 2024 .
Removed
From June 4, 2012 to December 31, 2022, we were a party to a Cooperative Marketing Agreement (“CMA”) with the Shakopee Mdewakanton Sioux Community ("SMSC"), a federally recognized Indian tribe. The primary purpose of the CMA was to increase purses paid during live horse racing at Canterbury Park’s Racetrack in order to strengthen Minnesota’s thoroughbred and quarter horse industry.
Added
In addition, the MBF receives 1% of the handle.
Removed
During the term of the CMA, the Company agreed not to promote or lobby the Minnesota legislature for expanded gambling authority and support the SMSC’s lobbying efforts against expanding gambling authority. On June 1, 2020, we entered into a Fifth Amendment Agreement to the CMA, which became effective on June 8, 2020 upon MRC approval.
Added
Live Racing For the years ended December 31, 2024 and 2023 , the Racetrack hos ted 54 and 53 d ays of live racing, respectively, beginning in May and concluding in September. In 2024, the Company had one day of live racing shortened due to inclement weather.
Removed
Under the Fifth Amendment, the SMSC paid an annual purse enhancement of $7,280,000 for 2022. Additionally, the SMSC paid an annual marketing payment under the CMA of $1,620,000 for 2022. The CMA expired by its terms on December 31, 2022. Accordingly, for 2023, there were no purse enhancement payments or marketing payments under the CMA.
Added
The land was used for the development of a 147-unit senior living community with initial occupancy beginning during the fourth quarter of 2023. ○ During the fourth quarter of 2022, Canterbury DBSV transferred approximtely1.5 acres of land as an equity contribution into another joint venture, called SW Gateway, LLC, a Minnesota limited liability company.
Removed
In connection with the land sale and amphitheater development, Canterbury received approval for the first phase of its barn relocation and redevelopment plan which is expected to be completed in 2025.
Added
The land was used for the development of a new, 10,000 square foot commercial building that is occupied by a local pizza restaurant, BBQ restaurant, and fitness center, all of which are in operation as of February 2025. 5 ○ During the third quarter of 2024, Canterbury DBSV transferred approximately1.5 acres of land as an equity contribution into another joint venture, called High Stakes, LLC, a Minnesota limited liability company.
Removed
Minimum Wage Legislation Minnesota has adopted a minimum wage law that sets the minimum hourly wage that must be paid to most Company employees. Beginning January 1, 2018, the minimum wage increases at the beginning of each year by the rate of inflation with a maximum increase of up to 2.5% per year .
Added
In connection with its contribution, Canterbury DBSV became a 31.22% equity member in High Stakes, LLC.
Removed
The minimum wage for 2023 was $10.59 per hour and is $10.85 per hour for 2024. T his legislation has had an adverse financial impact on the Company by increasing expenses and we expect will continue to have an adverse impact on the Company.
Added
The land is being used for the development of a new, 28,000 square foot office building, which is expected to begin operations in July 2025. ● On September 20, 2023, Canterbury Development, entered into an Operating Agreement with Trackside Hospitality, LLC as the two members of a Minnesota limited liability company named Trackside Investments, LLC ("Trackside Investments").
Removed
See the "Management's Discussion and Analysis of Financial Condition and Results of Operations." From time to time, we have implemented measures to partially mitigate the impact of increases in the minimum wage by raising our prices and reducing our employee count.
Added
Trackside Investments was formed as a joint venture for the development of an approximately 16,000 square foot restaurant and entertainment venue. Canterbury Development's equity contribution to Trackside Investments was approximately 3.5 acres of land, which were contributed to Trackside Investments on August 20, 2024. In connection with its contribution, Canterbury Development became a 50% equity member in Trackside Investments.
Removed
The Company continues to focus on creating a premier guest experience as the core element of its marketing efforts.
Added
Local Regulation The Company’s operations are subject to state and local laws, regulations, ordinances, and other provisions affecting zoning, public health, and other matters that may have the effect of restricting the uses to which the Company’s land and other assets may be used.
Removed
The impact of the COVID-19 pandemic on the entertainment industry, and actions that we and others in the industry took in response to COVID-19 (i ncluding implementing furloughs, reduced work week schedules, temporarily pay reductions, and eliminating a number of job positions) have adversely affected our ability to attract and retain team members.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

31 edited+10 added−5 removed73 unchanged
Biggest changeWhile the Company maintains insurance for inclement weather conditions, if a prolonged business interruption were to occur due to inclement weather and continue for a significant length of time at our racetrack, it could have a material adverse impact on our business, financial condition, and results of operations. 15 Risks Related to Government Regulation of our Horse Racing and Gaming Generally We are subject to changes in the laws that govern our business, including the possibility of an increase in gaming taxes, which would increase our costs, and changes in other laws may adversely affect our ability to compete.
Biggest changeWhile the Company maintains insurance for inclement weather conditions, if a prolonged business interruption were to occur due to inclement weather and continue for a significant length of time at our racetrack, it could have a material adverse impact on our business, financial condition, and results of operations.
Declining interest in horse racing has had a negative impact on revenues and profitability in our racing business. A general decline in interest in horse racing and pari-mutuel wagering could have a material adverse impact on our business, financial condition, and results of operations in future years.
Declining interest in horse racing has had a negative impact on revenues and profitability in our horse racing business. A general decline in interest in horse racing and pari-mutuel wagering could have a material adverse impact on our business, financial condition, and results of operations in future years.
In order to be successful, our real estate joint ventures must have competitive rental rates and maintain high occupancy rates with a financially stable tenant base. We may again in the future seek developers or other partners for joint venture arrangements or opportunities for Canterbury Development to develop our properties.
In order to be successful, our real estate joint ventures must have competitive rental rates and maintain high occupancy rates with a financially stable tenant base. 13 We may again in the future seek developers or other partners for joint venture arrangements or opportunities for Canterbury Development to develop our properties.
While we maintain insurance coverage specific to cyber-insurance matters, any failure on our part to maintain adequate safeguards may subject us to significant liabilities. 18 Additionally, if third parties we work with, such as vendors, violate applicable laws or our policies or suffer a significant cybersecurity incident, these violations may also put our customers’ information at risk and could in turn have an adverse effect on our business.
While we maintain insurance coverage specific to cyber-insurance matters, any failure on our part to maintain adequate safeguards may subject us to significant liabilities. 14 Additionally, if third parties we work with, such as vendors, violate applicable laws or our policies or suffer a significant cybersecurity incident, these violations may also put our customers’ information at risk and could in turn have an adverse effect on our business.
Additionally, if, for any reason, we are unable to reach an annual agreement with the MHBPA and the MQHRA for any future live racing season, our operations would be adversely affected by a decrease in the daily purses, potential reduction in the quality of horses, lower attendance, lower overall average handle, and substantially greater operating expenses.
Additionally, if, for any reason, we are unable to reach an annual agreement with the MNHBPA and the MQHRA for any future live racing season, our operations would be adversely affected by a decrease in the daily purses, potential reduction in the quality of horses, lower attendance, lower overall average handle, and substantially greater operating expenses.
Additionally, we compete with other forms of gambling, including betting on professional sports, spectator sports, other forms of entertainment, and other racetracks throughout the country. 14 We expect competition for our existing and future operations to increase from Running Aces, existing tribal casinos, and racetracks that are able to subsidize their purses with alternative gaming revenues.
Additionally, we compete with other forms of gambling, including betting on professional sports, spectator sports, other forms of entertainment, and other racetracks throughout the country. 11 We expect competition for our existing and future operations to increase from Running Aces, existing tribal casinos, and racetracks that are able to subsidize their purses with alternative gaming revenues.
Canterbury Development and its joint ventures face competition from developers of other residential, mixed use, office, retail, hotel, and entertainment spaces around Shakopee, Minnesota and elsewhere in Minnesota. These other developers may be larger and have more resources than Canterbury Development or than Canterbury Devel opment and its developer partners on a combined basis.
Canterbury Development and its joint ventures face competition from developers of other residential, mixed use, office, retail, hotel, and entertainment spaces around Shakopee, Minnesota and elsewhere in Minnesota. These other developers may be larger and have more resources than Canterbury Development or than Canterbury Development and its developer partners on a combined basis.
The purse enhancement payments were paid directly to the MHBPA to support purse sizes and accordingly, such payments had no direct impact on the Company’s consolidated financial statements or operations. The marketing payments under the CMA offset the Company’s expense relating to certain marketing efforts, including signage, promotions, player benefits, and events.
The purse enhancement payments were paid directly to the MNHBPA to support purse sizes and accordingly, such payments had no direct impact on the Company’s consolidated financial statements or operations. The marketing payments under the CMA offset the Company’s expense relating to certain marketing efforts, including signage, promotions, player benefits, and events.
If Doran's ability to successfully lease and operate this project is impaired, it could have a material adverse effect on our business, prospects, financial condition, or results of operations. 16 We rely on the efforts of our partner Greystone Construction for a new development project.
If Doran's ability to successfully lease and operate this project is impaired, it could have a material adverse effect on our business, prospects, financial condition, or results of operations. We rely on the efforts of our partner Greystone Construction for a development project.
For the 2024 live racing season, we have agreed with the MHBPA and MQHRA to a 54-day racing season and have agreed to contribute an additional share of our Casino revenue to the statutorily required purse amounts to guarantee purses for overnight races at $23,000 per race.
For the 2024 live racing season, we agreed with the MNHBPA and MQHRA to a 54-day racing season and have agreed to contribute an additional share of our Casino revenue to the statutorily required purse amounts to guarantee purses for overnight races at $23,000 per race.
However, there can be no assurance that our agreed-upon purse supplements will have the expected impact on the financial performance of live racing or that any improved financial performance of live racing will offset the amounts we contribute to purses. Further, there can be no assurance that we will receive any reimbursement of any 2024 overpayment amount.
However, there can be no assurance that our agreed-upon purse supplements will have the expected impact on the financial performance of live racing or that any improved financial performance of live racing will offset the amounts we contribute to purses. Further, there can be no assurance that we will receive any reimbursement of any 2025 overpayment amount.
In addition to pari-mutuel wagering, Running Aces operates a card room that directly competes with the Company’s Casino. We also compete with Native American owned casinos. These Native American facilities have the advantage of being exempt from some state and federal taxes and state regulation of indoor smoking, and have the ability to offer a wider variety of gaming products.
In addition to pari-mutuel wagering, Running Aces operates a card room that directly competes with the Company’s Casino. We also compete with tribal-owned casinos. These tribal facilities have the advantage of being exempt from some state and federal taxes and state regulation of indoor smoking, and have the ability to offer a wider variety of gaming products.
On June 16, 2020, Canterb ury Development entered into an operating agreement with an affiliate of Greystone Construction, as the two members of a Minnesota limited liability company named Canterbury DBSV Development, LLC (Canterbury DBSV).
On June 16, 2020, Canterbury Development entered into an operating agreement with an affiliate of Greystone Construction ("Greystone"), as the two members of a Minnesota limited liability company named Canterbury DBSV Development, LLC (Canterbury DBSV).
Pursuant to this second agreement, in early August 2020, the Company transferred roughly 10 acres of land to the second joint venture with Doran, resulting in receiving 27.4% ownership in the Doran Phase II joint venture. Canterbury Development will rely on Doran for the successful leasing and operation of the Triple Crown Residences.
Pursuant to this second agreement, in early August 2020, the Company transferred approximately 10 acres of land to the second joint venture with Doran, resulting in receiving 27.4% ownership in the Doran II joint venture. Canterbury Development will rely on Doran for the successful leasing and operation of the Triple Crown Residences.
We may not execute successfully on our growth strategy because of legislative, regulatory, financial, or other hurdles that we fail to overcome in a timely fashion, or lack of appropriate resources. Addit ionally, we may compete with other companies for attractive strategic opportunities.
We may not successfully execute on our growth strategy because of legislative, regulatory, financial, or other hurdles that we fail to overcome in a timely fashion, or lack of appropriate resources. Additionally, we may compete with other companies for attractive strategic opportunities.
The return on our investments in strategic transactions and initiatives may be lower, or may develop more slowly, than we expect. Our growth strategy may place significant de mands on our financial, operational and management resources.
The return on our investments in strategic transactions and initiatives may be lower, or may develop more slowly, than we expect. Our growth strategy may place significant demands on our financial, operational and management resources.
Decreases in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions or the economic conditions in the Twin Cities or Minnesota specifically, effects of declines in consumer confidence in the economy, any future employment and credit crisis, the impact of high and prolonged inflation, particularly with respect to housing, energy and food costs, the increased cost of travel, decreased disposable consumer income and wealth, fears of war and future acts of terrorism, or widespread illnesses or epidemics, including COVID-19, can have a material adverse effect on discretionary spending and other areas of economic behavior that directly impact the gaming and entertainment industries in general and could further reduce customer demand in our Casino, Racetrack and food and beverage segments, which may negatively impact our revenues and operating cash flow. 13 We have experienced a decrease in revenue and profitability from live racing.
Decreases in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions or the economic conditions in the Twin Cities or Minnesota specifically, effects of declines in consumer confidence in the economy, any future employment and credit crisis, the impact of high and prolonged inflation, particularly with respect to housing, energy and food costs, the increased cost of travel, decreased disposable consumer income and wealth, fears of war and future acts of terrorism, or widespread illnesses or epidemics can have a material adverse effect on discretionary spending and other areas of economic behavior that directly impact the gaming and entertainment industries in general and could further reduce customer demand in our Casino, Racetrack and food and beverage segments, which may negatively impact our revenues and operating cash flow.
Since horse racing is conducted outdoors, unfavorable weather conditions, including extremely high and low temperatures, high winds, storms, tornadoes, and hurricanes, could cause events to be postponed or canceled or attendance to be lower, resulting in reduced wagering. For example, in 2023, the Company had one day of live racing cancelled and two other days shortened due to inclement weather.
Since horse racing is conducted outdoors, unfavorable weather conditions, including extremely high and low temperatures, high winds, storms, tornadoes, and smoke, could cause events to be postponed or canceled or attendance to be lower, resulting in reduced wagering. For example, in 2024, the Company had one day of live racing shortened due to inclement weather.
These factors resulte d in a decrease in wagering on live races (particularly out-of-state handle), which ultimately result in a decrease in revenue from live racing in 2023 as compared to 2022. We enter into an agreement with the horsepersons each year for the following year’s live racing season.
These factors resulted in a decrease in wagering on live races (particularly out-of-state handle), which ultimately resulted in a decrease in revenue from live racing in 2024 and 2023 as compared to 2022. 10 We enter into an agreement with the horsepersons each year for the following year’s live racing season.
Accordingly, due to the lack of an annual purse enhancement, the purses and the number of races we were able to offer in the 2023 live racing season were smaller than they h ave been in the past.
Accordingly, due to the lack of an annual purse enhancement, the purses and the number of races we were able to offer in the 2024 and 2023 live racing seasons were smaller than they have been in the past.
If we are unable to successfully identify, recruit, develop, and retain qualified personnel or adapt to changing worker expectations and working arrangements, it may be difficult for us to manage and grow our business, which could adversely affect our results of operations and financial condition.
Sampson, who has served as our Chief Executive Officer since 1994. If we are unable to successfully identify, recruit, develop, and retain qualified personnel or adapt to changing worker expectations and working arrangements, it may be difficult for us to manage and grow our business, which could adversely affect our results of operations and financial condition.
A failure to offer races with adequate fields generally results in less wagering on our horse races, which we experienced during the 2023 live racing season. Our ability to attract adequate fields depends on several factors, including our ability to offer and fund competitive purses and overall horse population available for racing.
A failure to offer races with adequate fields generally results in less wagering on our horse races. Our ability to attract adequate fields depends on several factors, including our ability to offer and fund competitive purses and overall horse population available for racing.
In addition, poor economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes. It is not possible to predict with certainty the likelihood of changes in tax laws or in the administration of these laws. These changes, if adopted, could have a material adverse effect on our operations.
In addition, poor economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes. It is not possible to predict with certainty the likelihood of changes in tax laws or in the administration of these laws.
In addition, the Minnesota Racing Act requires that we reimburse the MRC for its actual costs of regulating the Casino, including personnel costs. Increases in these licensing and regulatory costs could adversely affect our results of operations.
The MRC has the authority to increase the Class A and Class B license fees. In addition, the Minnesota Racing Act requires that we reimburse the MRC for its actual costs of regulating the Casino, including personnel costs. Increases in these licensing and regulatory costs could adversely affect our results of operations.
Following the expiration of the CMA on December 31, 2022, we did not receive any purse enhancement, marketing payments, or other amounts under the CMA. In 2022, the SMSC paid an annual purse enhancement of $7,280,000 and an annual marketing payment of $1,620,000.
We have experienced a decrease in revenue and profitability from live racing. Following the expiration of the Cooperative Marketing Agreement ("CMA") on December 31, 2022, we did not receive any purse enhancement, marketing payments, or other amounts under the CMA. In 2022, the SMSC paid an annual purse enhancement of $7,280,000 and an annual marketing payment of $1,620,000.
In September 2018, Canterbury Development contributed approxi mately 13 acr es of land as its equity contribution in the Doran Canterbury I joint venture and became a 27.4% equity member. Construction of the 321-unit first phase began in late 2018 with initial occupancy on June 1, 2020.
In September 2018, Canterbury Development contributed approximately 13 acres of land as its equity contribution in the Doran Canterbury I joint venture and became a 27.4% equity member. Construction of the 321-unit first phase began in late 2018 with initial occupancy on June 1, 2020. As of the end of December 2021, all 321 units were available for occupancy.
As of the end of December 2021, all 321 units were available for occupancy. In August 2020, Doran exerc ised its option for Phase II of the project, which will include an additional 300 residential units, and Canterbury Development entered into a second joint venture agreement with Doran.
In August 2020, Doran exercised its option for Phase II of the project to include an additional 300 residential units, and Canterbury Development entered into a second joint venture agreement with Doran.
In the event that additional purse revenue is secured through additional forms of gaming at Canterbury, new revenue streams, or legislative action are obtained to fund purses and beyond the current statutory requirements, we will be eligible for reimbursement of the actual 2024 overpayment amount from those purse supplements.
In the event that additional purse revenue is secured within the five years following the 2025 live race meet through additional forms of gaming at the Company, new revenue streams, or legislative action, the Company will be eligible for reimbursement of the actual 2024 overpayment amount from those purse supplements.
We are subject to extensive regulation from gaming authorities that could adversely affect us. We are subject to significant regulation by the MRC under the Racing Act and the rules adopted by the MRC. The MRC has the authority to increase the Class A and Class B license fees.
These changes, if adopted, could have a material adverse effect on our operations. 12 We are subject to extensive regulation from gaming authorities that could adversely affect us. We are subject to significant regulation by the MRC under the Racing Act and the rules adopted by the MRC.
In order to ensure the guaranteed minimum overnight purse structure, we will be making an overpayment that may be repaid to us through reimbursement in subsequent racing years. This anticipated overpayment of purses is intended to create a short-term bridge until additional purse supplements can be obtained from other sources.
This anticipated overpayment of purses by the Company is intended to create a short-term bridge until additional purse supplements can be obtained from other sources.
Multi-year increases in the Minnesota minimum wage due to sustained inflation could have a material adverse impact on the Company. 17 Our success may be affected if we are not able to attract, develop, and retain qualified personnel. Our ability to compete effectively depends on our ability to identify, recruit, develop, and retain qualified personnel.
Our success may be affected if we are not able to attract, develop, and retain qualified personnel. Our ability to compete effectively depends on our ability to identify, recruit, develop, and retain qualified personnel. In particular, we depend upon the skills and efforts of our senior executives and management team, including Randall D.
Removed
This arrangement will have the effect of increasing the average purse size per live race for the 2024 live racing season, which we expect will lead to larger field sizes, an increase in wagering on live races and increased revenue from live racing as compared to 2023.
Added
The parties recognized there was likely to be a significant financial cost to the Company in establishing a 2024 thoroughbred purse structure intended to average $23,000 per conducted overnight race and that to maintain that average purse structure, the Company made an overpayment that may be repaid to the Company by the MNHBPA through reimbursement in subsequent racing years.
Removed
An increase in the minimum wage mandated under Federal or Minnesota law could have a material adverse effect on our operations and financial results. The Company employs a large number of individuals at an hourly wage equal to or slightly above the current state mandated wage of $10.85 per hour for 2024.
Added
This overpayment of purses by the Company was intended to create a short-term bridge until additional purse supplements can be obtained from other sources.
Removed
See “Regulation and Regulatory Changes” above for additional information regarding minimum wage legislation. Most of these employees are either high school or college students employed on a seasonal basis or tipped employees, many of whom receive, on average, tip income that is significantly higher than the current minimum wage. From time to time, legislation is introduced in the U.S.
Added
At the conclusion of the 2024 live race meet, the Company recorded a receivable related to the overpayment of 2024 purses in the amount of $1,597,463, which is presented on the Company's balance sheet as of December 31, 2024.
Removed
Congress or the Minnesota legislature that would substantially increase the minimum wage. Passage of legislation that would substantially increase the minimum wage could have a material adverse impact on the Company. Additionally, the Minnesota minimum wage annually increases at the beginning of each year by the rate of inflation with a maximum increase of up to 2.5% per year.
Added
Management believes it is likely that additional purse supplements will ultimately be obtained when considering both the length of time to secure such funds (five years following the 2025 live race meet) and the fact that legislation has been introduced in both chambers of the Minnesota legislature that would provide those supplements through revenues from taxes paid by sports wagering licenses.
Removed
In particular, we depend upon the skills and efforts of our senior executives and management team, including Randall D. Sampson, who has served as our Chief Executive Officer since 1994.
Added
Accordingly, management believes no allowance related to this receivable is necessary at December 31, 2024. In addition, the Company agreed to allocate approximately $400,000 to be used as recruiting and participation incentives to attract thoroughbred trainers, owners, and stables for the 2024 live meet in an effort to generate additional pari-mutuel handle through improved field size.
Added
For the year ended 2024, the Company recognized expenses of $418,000 related to these incentives. Additionally, for the 2025 live racing season, we agreed with the MNHBPA and MQHRA to a 51-day racing season and have agreed to contribute an additional $500,000 above the statutorily required purse amounts to guarantee purses.
Added
In the event that additional purse revenues are secured throughout the duration of the 2025 live race agreement, the Company has agreed to provide additional purse monies of up to $1,500,000, to a total of $2,000,000 in potential overpayment of purses to support the 2025 live race meet.
Added
The parties recognize there is likely to be a significant financial cost to the Company in establishing this 2025 thoroughbred purse structure and that to maintain that average purse structure, the Company will be making an overpayment that may be repaid to the Company by the MNHBPA through reimbursement in subsequent racing years.
Added
In the event that additional purse revenue is secured within the five years following the 2025 live race meet through additional forms of gaming at the Company, new revenue streams, or legislative action, the Company will be eligible for reimbursement of the actual 2025 overpayment amount from those purse supplements.
Added
Risks Related to Government Regulation of our Horse Racing and Gaming Generally We are subject to changes in the laws that govern our business, including the possibility of an increase in gaming taxes, which would increase our costs, and changes in other laws may adversely affect our ability to compete.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company maintains a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third-party systems.
Biggest changeThe Company provides specialized security training for certain employee roles. 15 The Company maintains a comprehensive, risk-based approach to identifying and overseeing cybersecurity risks presented by third parties, including vendors, service providers, as well as the systems of third parties that could adversely impact our business in the event of a cybersecurity incident affecting those third -party systems.
These trainings are supplemented by Company-wide assessment initiatives, including periodic testing. The Company provides specialized security training for certain employee roles.
These trainings are supplemented by Company-wide assessment initiatives, including periodic testing.

Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−1 removed1 unchanged
Biggest changeIn 2022, the Company sold approximate ly four acres of land to the west of the Racetrack. As of December 31, 2023, the Company has approximately 40 acres of land re maining that are owned or controlled by the Company that are not currently used for its business operations, and could be developed or sold, in whole or in part.
Biggest changeAs of December 31, 2024 , the Company has approximately 35 acres of land remaining that are owned or controlled by the Company that are not currently used for its business operations, and could be developed or sold, in whole or in part. See discussion above titled “Development Operations” and footnote 11 to the consolidated financial statements for more information.
The Racetrack’s grandstand has a patron capacity of approximately 10,000 within enclosed areas and a maximum patron capacity of over 30,000 including outside areas around the grandstand. 19 Underutilized Land In 2023, the Company sold approximat ely 37 acres of land to the north of the racetrack for the development of a state-of-the-art amphitheater.
The Racetrack’s grandstand has a patron capacity of approximately 10,000 within enclosed areas and a maximum patron capacity of over 30,000 including outside areas around the grandstand. Underutilized Land In 2024, the Company transferred approximately 3.5 acres of land to the Trackside Investments joint venture.
Removed
See discussion above titled “Development Operations” and footnote 12 to the consolidated financial statements for more information.
Added
In 2023, the Company sold approximately 37 acres of land to the north of the racetrack for the development of a state-of-the-art amphitheater.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION The Company’s common stock trades on the Nasdaq Global Market under the symbol CPHC. HOLDERS At March 7, 2024, the Company had 568 sha reholders of record of its common stock. 20 Item 6. [RESERVED]
Biggest changeItem 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION The Company’s common stock trades on the Nasdaq Global Market under the symbol CPHC. HOLDERS At March 6, 2025, the Company had 556 shareholders of record of its common stock. Item 6. [RESERVED]

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe following summarizes our financial performance for the last five years (in 000’s): Financial Performance Summary 2023 2022 2021 2020 2019 Net Revenues $ 61,437 $ 66,824 $ 60,400 $ 33,140 $ 59,227 Operating Expenses 56,426 55,943 42,882 (1) 34,882 55,591 (2) Gain on Transfer/Sale of Land 6,490 12 264 2,368 — Income (Loss) Before Income Taxes 14,980 10,235 15,798 (189 ) 3,963 Income Tax (Expense) Benefit (4,417 ) (2,722 ) (3,999 ) 1,251 (1,244 ) Net Income 10,563 7,513 11,798 1,062 2,718 1 During fiscal year 2021, the Company reduced operating expenses $6,314,000 by recording an employee retention credit, a refundable tax credit. 2 During fiscal year 2019, the Company reduced operating expenses $21,000 by recording a gain on insurance recoveries. 21 EMPLOYEE RETENTION CREDIT The employee retention credit (“ERC”), as originally enacted on March 27, 2020 by the CARES Act, is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021.
Biggest changeThe following summarizes our financial performance for the last five years (in 000’s): Financial Performance Summary 2024 2023 2022 2021 2020 Net Revenues $ 61,562 $ 61,437 $ 66,824 $ 60,400 $ 33,140 Operating Expenses 56,862 56,426 55,943 42,882 (1) 34,882 Gain on Transfer/Sale of Land 1,732 6,490 12 264 2,368 Income (Loss) Before Income Taxes 3,037 14,980 10,235 15,798 (189 ) Income Tax (Expense) Benefit (924 ) (4,417 ) (2,722 ) (3,999 ) 1,251 Net Income 2,113 10,563 7,513 11,798 1,062 1 During fiscal year 2021, the Company reduced operating expenses $6,314,000 by recording an employee retention credit, a refundable tax credit.
The Company experienced an increase in cash related to an employee retention credit receivable of $6,103,000, offset by a decrease in accounts payable, net of land, buildings, and equipment funded through accounts payable, of $1,465,000, and an increase in income taxes receivable of $2,031,000.
The Company experienced an increase in cash related to a decrease in employee retention credit receivable of $6,103,000, offset by a decrease in accounts payable, net of land, buildings, and equipment funded through accounts payable, of $1,465,000, and an increase in income taxes receivable of $2,031,000.
CASH FLOWS FROM FINANCING ACTIVITIES Net cash used in financing activities for 2023 was $1,345,000 primarily due to cash dividends paid to shareholders and payments for taxes of equity awards, partially offset by proceeds from the issuance of common stock.
Net cash used in financing activities for 2023 was $1,345,000 primarily due to cash dividends paid to shareholders and payments for taxes of equity awards, partially offset by proceeds from the issuance of common stock.
Effective December 21, 2023, the Company entered into its annual live race meet and purse fund contribution agreement with the Minnesota Horsemen’s Benevolent & Protective Association (“MNHBPA”) and the Minnesota Quarter Horse Racing Association (“MQHRA”) regarding the upcoming 2024 live race meet.
Effective December 21, 2023, the Company entered into its annual live race meet and purse fund contribution agreement with the Minnesota Horsemen’s Benevolent & Protective Association (“MNHBPA”) and the Minnesota Quarter Horse Racing Association (“MQHRA”) regarding the 2024 live race meet.
In an effort to increase field size and improve the quality of racing for the 2024 season, the Company has guaranteed purses for overnight races at $23,000 per race.
In an effort to increase field size and improve the quality of racing for the 2024 season, the Company guaranteed purses for overnight races at $23,000 per race.
These important factors include, but are not limited to: ● We may not be successful at implementing our growth strategy. ● Our business is sensitive to reductions in discretionary consumer spending as a result of downturns in the economy and other factors outside of our control. ● We have experienced a decrease in revenue and profitability from live racing. ● We may not be able to attract a sufficient number of horses and trainers to achieve above average field sizes. ● We face significant competition, both directly from other racing and gaming operations and indirectly from other forms of entertainment and leisure time activities, which could have a material adverse effect on our operations. ● Nationally, the popularity of horse racing has declined. ● A lack of confidence in the integrity of our core businesses could affect our ability to retain our customers and engage with new customers. ● Horse racing is an inherently dangerous sport and our racetrack is subject to personal injury litigation. ● Our business depends on using totalizator services. ● Inclement weather and other conditions may affect our ability to conduct live racing. ● We are subject to changes in the laws that govern our business, including the possibility of an increase in gaming taxes, which would increase our costs, and changes in other laws may adversely affect our ability to compete. ● We are subject to extensive regulation from gaming authorities that could adversely affect us. ● We rely on the efforts of our partner Doran for the development and profitable operation of our Triple Crown Residences at Canterbury Park joint venture. ● We rely on the efforts of our partner Greystone Construction for a new development project. ● We may not be successful in executing our real estate development strategy. ● We are obligated to make improvements in the TIF district and will be reimbursed only to the extent of future tax revenue. ● We face competition from other real estate developers. ● We may be adversely affected by the effects of inflation. ● An increase in the minimum wage mandated under Federal or Minnesota law could have a material adverse effect on our operations and financial results. ● Our success may be affected if we are not able to attract, develop and retain qualified personnel. ● The payment and amount of future dividends is subject to Board of Director discretion and to various risks and uncertainties. ● Our information technology and other systems are subject to cyber security risk including misappropriation of customer information or other breaches of information security. ● We process, store, and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and our actual or perceived failure to comply with such obligations could harm our business.
These important factors include, but are not limited to: ● We may not be successful at implementing our growth strategy. ● Our business is sensitive to reductions in discretionary consumer spending as a result of downturns in the economy and other factors outside of our control. ● We have experienced a decrease in revenue and profitability from live racing. ● We may not be able to attract a sufficient number of horses and trainers to achieve above average field sizes. ● We face significant competition, both directly from other racing and gaming operations and indirectly from other forms of entertainment and leisure time activities, which could have a material adverse effect on our operations. ● Nationally, the popularity of horse racing has declined. ● A lack of confidence in the integrity of our core businesses could affect our ability to retain our customers and engage with new customers. ● Horse racing is an inherently dangerous sport and our racetrack is subject to personal injury litigation. ● Our business depends on using totalizator services. ● Inclement weather and other conditions may affect our ability to conduct live racing. ● We are subject to changes in the laws that govern our business, including the possibility of an increase in gaming taxes, which would increase our costs, and changes in other laws may adversely affect our ability to compete. ● We are subject to extensive regulation from gaming authorities that could adversely affect us. ● We rely on the efforts of our partner Doran for the development and profitable operation of our Triple Crown Residences at Canterbury Park joint venture. ● We rely on the efforts of our partner Greystone Construction for a new development project. ● We may not be successful in executing our real estate development strategy. ● We are obligated to make improvements in the TIF district and will be reimbursed only to the extent of future tax revenue. ● We face competition from other real estate developers. ● We may be adversely affected by the effects of inflation. ● Our success may be affected if we are not able to attract, develop and retain qualified personnel. ● The payment and amount of future dividends is subject to Board of Director discretion and to various risks and uncertainties. ● Our information technology and other systems are subject to cyber security risk including misappropriation of customer information or other breaches of information security. ● We process, store, and use personal information and other data, which subjects us to governmental regulation and other legal obligations related to privacy, and our actual or perceived failure to comply with such obligations could harm our business.
The Company also derives revenues from related services and activities, such as food and beverage, parking, advertising signage, publication sales, and from other entertainment events and activities held at the Racetrack. In 2023, Canterbury Development continued to pursue various development opportunities that began in 2015 for its underutilized land in a project known as Canterbury Commons.
The Company also derives revenues from related services and activities, such as food and beverage, parking, advertising signage, publication sales, and from other entertainment events and activities held at the Racetrack. In 2024, Canterbury Development continued to pursue various development opportunities that began in 2015 for its underutilized land in a project known as Canterbury Commons.
EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles in the United States of America ("GAAP"), and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance or cash flows from operating activities as a measure of liquidity.
EBITDA is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and should not be considered an alternative to, or more meaningful than, net income as an indicator of our operating performance or cash flows from operating activities as a measure of liquidity.
CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities for 2023 of $455,000 was used primarily for additions to land, buildings, and equipment of $7,908,000, an increase in related party receivable of $971,000, primarily due to additional member loans and interest related to the member loans, and purchases of short-term investments of $5,000,000.
Net cash used in investing activities for 2023 of $455,000 was used primarily for additions to land, buildings, and equipment of $7,908,000, an increase in related party receivable of $971,000, primarily due to additional member loans and interest related to the member loans, and purchases of short-term investments of $5,000,000.
The Company also maintains a poker promotional pool where a portion of the poker "rake" is collected and accumulated into a promotional pool to enhance the total amount paid back to poker players. The Company is required to return accumulated poker promotional pool funds to the players through poker jackpots, giveaways, promotional items, prizes, or by other means.
The Company also maintains a poker promotional pool where a portion of the poker “rake” is collected and accumulated into a promotional pool to enhance the total amount paid back to poker players. The Company is required to return accumulated poker promotional pool funds to the players through poker jackpots, giveaways, promotional items, prizes, or by other means.
As a result of our analysis for the year ended December 31, 2023, management believes the TIF receivable will be fully collectible and no allowance related to this receivable is necessary.
As a result of our analysis for the year ended December 31, 2024 , management believes the TIF receivable will be fully collectible and no allowance related to this receivable is necessary.
LIQUIDITY AND CAPITAL RESOURCES CASH FLOWS FROM OPERATING ACTIVITIES Cash provided by operating activities for 2023 was $11,537,000, primarily as a result of the following: the Company reported net income of $10,563,000, depreciation of $3,145,000, deferred income taxes of $2,826,000, and stock-based compensation and 401(k) match totaling $1,379,000, offset by a gain from equity investment of $1,501,000 and a gain on land sale of $6,490,000 .
Cash provided by operating activities for 2023 was $11,537,000, primarily as a result of the following: the Company reported net income of $10,563,000, depreciation of $3,145,000, deferred income taxes of $2,826,000, and stock-based compensation and 401(k) match totaling $1,379,000, offset by a gain from equity investment of $1,501,000 and a gain on land sale of $6,490,000.
The MRC regulates the operation of the player pool and progressive jackpot pools. These liabilities have the potential for significant fluctuation on a daily basis. All games in the Casino are played using chips. The value of chips issued and outstanding, referred to as the “outstanding chip liability,” was $558,000 and $587,000 at December 31, 2023 and 2022 , respectively.
The MRC regulates the operation of the player pool and progressive jackpot pools. These liabilities have the potential for significant fluctuation on a daily basis. All games in the Casino are played using chips. The value of chips issued and outstanding, referred to as the “outstanding chip liability,” was $447,000 and $558,000 at December 31, 2024 and 2023 , respectively.
The Company typically performs an annual collectability analysis of the TIF receivable in the fourth quarter of each year, or more frequently if indicators of the receivable to be potentially uncollectable exist. The Company utilizes a third party to assist with the projected tax increments.
The Company typically performs an annual collectability analysis of the TIF receivable in the fourth quarter of each year, or more frequently if indicators of the receivable to be potentially uncollectable exist. The Company utilizes a third-party to assist with the projected tax increment revenues.
COMMITMENTS AND CONTINGENCIES Effective December 21, 2021, the Company entered into a Contribution and Indemnity Agreement ("Indemnity Agreement") with affiliates of Doran Companies ("Doran") relating to debt financing by Doran Canterbury I, LLC as borrower, which is guaranteed by Doran affiliates.
COMMITMENTS AND CONTINGENCIES Effective December 21, 2021, the Company entered into a Contribution and Indemnity Agreement (“Indemnity Agreement”) with affiliates of Doran Companies (“Doran”) relating to debt financing by Doran Canterbury I, LLC as borrower, which is guaranteed by Doran affiliates.
The increase for the 2023 is primarily due to our share of a gain recognized on insurance proceeds received on a claim by Doran Canterbury I. The Company's portion of the gain on insurance proceeds recognized by Doran Canterbury I was $4,228,000.
The decrease for 2024 is primarily due to our share of a gain recognized on insurance proceeds received on a claim by Doran Canterbury I during 2023. The Company's portion of the gain on insurance proceeds recognized by Doran Canterbury I was $4,228,000.
In addition to this write-off, the Company had multiple additional asset disposals for a gain of $ 66,000, resulting in a net loss on disposal of assets of $157,000 for the year ended December 31, 2023. During 2022, the Company performed a review of any fixed assets that were no longer in service at December 31, 2022.
In addition to this write-off, the Company had multiple additional asset disposals for a gain of $7,000, resulting in a net loss on disposal of assets of $49,000 for the year ended December 31, 2024 . During 2023, the Company performed a review of any fixed assets that were no longer in service at December 31, 2023 .
These development opportunities have included contributions of land to joint ventures, three as of the end of December 2023, and sales of parcels of land to third parties that will then develop the property.
These development opportunities have included contributions of land to joint ventures, four as of the end of December 2024, and sales of parcels of land to third parties that will then develop the property.
The Company is required to return accumulated player pool funds to the players through giveaways, promotional items, prizes, or by other means. The player pool liability was $1,055,000 and $1,064,000 at December 31, 2023 and 2022 , respectively. Additionally, the table games jackpot pool was $524,000 and $309,000 at December 31, 2023 and 2022 , respectively.
The Company is required to return accumulated player pool funds to the players through giveaways, promotional items, prizes, or by other means. The player pool liability was $542,000 and $1,055,000 at December 31, 2024 and 2023 , respectively. Additionally, the table games jackpot pool was $696,000 and $524,000 at December 31, 2024 and 2023 , respectively.
Pursuant to an agreement with the MHBPA, we transferred into a trust account or paid directly to the MHBPA, approximately $7,133,000 and $7,846,000 in purse funds related to thoroughbred races for 2023 and 2022 , respectively. Minnesota law provides that amounts transferred into this trust account are the property of the trust and not the Company.
Pursuant to an agreement with the MNHBPA, we transferred into a trust account or paid directly to the MNHBPA, approximately $8,288,000 and $7,133,000 in purse funds related to thoroughbred races for 2024 and 2023 , respectively. Minnesota law provides that amounts transferred into this trust account are the property of the trust and not the Company.
Our long-term strategic direction is to continue to enhance our Racetrack as a unique gaming and entertainment destination and develop the approximat ely 40 acres of underutilized land not needed for our Racetrack Operations.
Our long-term strategic direction is to continue to enhance our Racetrack as a unique gaming and entertainment destination and develop the approximately 35 acres of underutilized land not needed for our Racetrack Operations.
As a result of this review, management determined to dispose of assets resulting in a loss on disposal of $175,000 during the fourth quarter of 2022.
As a result of this review, management determined to dispose of assets resulting in a loss on disposal of $56,000 during the fourth quarter of 2024.
The poker promotional pool liability was $339,000 and $576,000 at December 31, 2023 and 2022, respectively. The Casino offers progressive jackpots for poker games. Amounts collected for these jackpot funds are accrued as liabilities until paid to winners. At December 31, 2023 and 2022 , accrued jackpot funds totaled $172,000 and $132,000, respectively.
The poker promotional pool liability was $364,000 and $339,000 at December 31, 2024 and 2023 , respectively. 21 The Casino offers progressive jackpots for poker games. Amounts collected for these jackpot funds are accrued as liabilities until paid to winners. At December 31, 2024 and 2023 , accrued jackpot funds totaled $88,000 and $172,000, respectively.
We receive guest fees from out-of-state racetracks and ADW companies for out-of-state wagering on our live races. Other revenues include source market fees paid by ADW companies for wagers made by Minnesota residents on out-of-state races and proceeds from unredeemed pari-mutuel tickets. Total 2023 pari-mutuel revenue decreased $2,704,000, or 24.7%, compared to 2022 .
We receive guest fees from out-of-state racetracks and ADW companies for out-of-state wagering on our live races. Other revenues include source market fees paid by ADW companies for wagers made by Minnesota residents on out-of-state races and proceeds from unredeemed pari-mutuel tickets. Total 2024 pari-mutuel revenue decreased $28,000, or 0.3%, compared to 2023 .
The Company recorded a provision for income taxes of $4,417,000 and $2,722,000 for 2023 and 2022, respectively. The increase in our tax expense for 2023 compared to 2022 is due to an increase in income before taxes from operations, primarily related to the gain on land sale mentioned above.
INCOME TAXES The Company recorded a provision for income taxes of $924,000 and $4,417,000 for 2024 and 2023, respectively. The decrease in our tax expense for 2024 compared to 2023 is due to a decrease in income before taxes from operations, primarily related to the 2023 gain on land sale mentioned above.
The parties recognize there is likely to be a significant financial cost to the Company in establishing a 2024 thoroughbred purse structure intended to average $23,000 per conducted overnight race and that to maintain that average purse structure, the Company will be making an overpayment that may be repaid to the Company through reimbursement in subsequent racing years.
The parties recognized there was likely to be a significant financial cost to the Company in establishing a 2024 thoroughbred purse structure intended to average $23,000 per conducted overnight race and that to maintain that average purse structure, the Company made an overpayment that may be repaid to the Company by the MNHBPA through reimbursement in subsequent racing years.
The Company is obligated to construct certain public infrastructure improvements within the TIF District, and will be reimbursed by the City of Shakopee by future tax increment revenue generated from the developed property.
The Company is obligated to construct certain public infrastructure improvements within the TIF District, and will be reimbursed by the City of Shakopee by future tax increment revenue generated from the developed property. See Note 11 for a more detailed description of the agreement.
CASINO REVENUES Year Ended December 31, 2023 2022 Poker Games Collection $ 7,477,000 $ 7,607,000 Other Poker Revenue 3,016,000 2,875,000 Total Poker Revenue 10,493,000 10,482,000 Table Games Collection 26,970,000 27,392,000 Other Table Games Revenue 2,318,000 2,345,000 Total Table Games Revenue 29,288,000 29,737,000 Total Casino Revenue $ 39,781,000 $ 40,219,000 The primary source of Casino revenue is a percentage of the wagers received from the players as compensation for providing the Casino facility and services, referred to as “collection revenue.” Other Revenue presented above includes fees collected for the administration of tournaments and amounts earned as reimbursement of the administrative costs of maintaining jackpot funds.
CASINO REVENUES Year Ended December 31, 2024 2023 Poker Games Collection $ 7,581,000 $ 7,477,000 Other Poker Revenue 3,191,000 3,016,000 Total Poker Revenue 10,772,000 10,493,000 Table Games Collection 24,768,000 26,970,000 Other Table Games Revenue 3,235,000 2,318,000 Total Table Games Revenue 28,003,000 29,288,000 Total Casino Revenue $ 38,775,000 $ 39,781,000 The primary source of Casino revenue is a percentage of the wagers received from the players as compensation for providing the Casino facility and services, referred to as “collection revenue.” Other revenue presented above includes fees collected for the administration of tournaments and amounts earned as reimbursement of the administrative costs of maintaining jackpot funds.
CASH AND CAPITAL RESOURCES At December 31, 2023 , we had cash, cash equivalents, and restricted cash of $25,842,000 compared to $16,106,000 at December 31, 2022 .
CASH AND CAPITAL RESOURCES At December 31, 2024 , we had cash, cash equivalents, and restricted cash of $13,687,000 compared to $25,842,000 at December 31, 2023 .
Effective December 12, 2023, the Indemnity Agreeme nt was amended to increase the maximum indemnification by an additional $1,300,000, bringing the total to a maximum of $7,000,000.
Effective December 12, 2023, the Indemnity Agreement was amended to increase the maximum indemnification by an additional $1,300,000. Effective December 18, 2024, the I ndemnity Agreement was amended to increase the maximum indemnification by an additional $500,000, bringing the total to a maximum of $7,500,000.
Management believes that the resolution of any pending claims and legal actions at December 31, 2023 and as of the date of this report will not have a material impact on the Company’s consolidated financial position or results of operations.
The Company is periodically involved in various claims and legal actions arising in the normal course of business. Management believes that the resolution of any pending claims and legal actions at December 31, 2024 and as of the date of this report will not have a material impact on the Company’s consolidated financial position or results of operations.
See Note 12 for a more detailed description of the agreement. 27 FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains various “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
We also expect that we will see higher than historic use of cash for guaranteed overnight purses for the 2024 live racing season, which are guaranteed under our annual live race meet and purse fund contribution agreement with the MHBPA and MQHRA, which may be repaid to the Company through reimbursement in subsequent racing years. 26 The Company has a general credit and security agreement with a financial institution.
We also expect that we will see higher than historic use of cash for guaranteed purses for the 2025 live racing season, which are guaranteed under our annual live race meet and purse fund contribution agreement with the MNHBPA and MQHRA, which may be repaid to the Company through reimbursement in subsequent racing years. See note 9 for further details.
PARI-MUTUEL REVENUES Year Ended December 31, 2023 2022 Simulcast $ 3,717,000 $ 3,862,000 Live racing 1,526,000 1,890,000 Guest fees 1,582,000 3,517,000 Other revenue 1,429,000 1,689,000 Total Pari-Mutuel Revenue $ 8,254,000 $ 10,958,000 Racing Days Simulcast only racing days 311 300 Live and simulcast racing days 53 64 Total Number of Racing Days 364 364 Simulcast and Live Racing pari-mutuel revenues include commission and breakage revenues from on-track live and simulcast wagering.
PARI-MUTUEL REVENUES Year Ended December 31, 2024 2023 Simulcast $ 3,595,000 $ 3,717,000 Live racing 1,557,000 1,526,000 Guest fees 1,702,000 1,582,000 Other revenue 1,372,000 1,429,000 Total Pari-Mutuel Revenue $ 8,226,000 $ 8,254,000 Racing Days Simulcast only racing days 311 311 Live and simulcast racing days 54 53 Total Number of Racing Days 365 364 Simulcast and Live Racing pari-mutuel revenues include commission and breakage revenues from on-track live and simulcast wagering.
For 2023 as compared to 2022, total pari-mutuel revenue decreased 24.7%, Casino revenue decreased 1.1%, food and beverage revenue decreased 4.8%, and other revenue decreased 24.9%. See below for a further discussion of our sources of revenues for each of our pari-mutuel, Casino, food and beverage, and other revenues.
For 2024 as compared to 2023 , total pari-mutuel revenue decreased 0.3%, Casino revenue decreased 2.5%, food and beverage revenue increased 1.8%, and other revenue increased 18.3%. See below for a further discussion of our sources of revenues for each of our pari-mutuel, Casino, food and beverage, and other revenues.
Also contributing to the 2023 increase was increased interest income of approximately $1,068,000 year-over-year, due to the Company transferring available cash into certificates of deposit and money market funds as well as increasing interest rates related to our member loans to Doran Canterbury I and Doran Canterbury II.
This was slightly offset by increased interest income of approximately $93,000 year-over-year, due to the Company transferring available cash into certificates of deposit and money market funds as well as increasing balances related to both our member loans to Doran Canterbury I and Doran Canterbury II and our increase in TIF receivable.
During 2023, the Company recorded a gain on sale of land of $6,490,000 as of result of the sale of approximately 37 acres of land to an affiliate of Swervo Development for approximately $8,800,000 in total consideration.
During 2023, the Company recorded a gain on sale of land of $6,490,000 as of result of the sale of approximately 37 acres of land to an affiliate of Swervo Development for approximately $8,800,000 in total consideration. During 2024, the Company performed a review of any fixed assets that were no longer in service at December 31, 2024 .
The increase is primarily due to an increase in our wage-rate structure for seasonal as well as year-round employees to attract and retain front-line workers. The Company also increased its 401(k) match percentage, effective January 1, 2023. Cost of food and beverage sales decreased $209,000, or 6.4%, in 2023 compared to 2022 .
The increase is primarily due to an increase in our wage-rate structure for seasonal as well as year-round employees to attract and retain front-line workers. Cost of food and beverage and other sales increased $133,000, or 4.3%, in 2024 compared to 2023 .
In addition to this write-off, the Company had multiple additional asset disposals for a gain of $18,000, resulting in a net loss on disposal of assets of $157,000 for the year ended December 31, 2022. 24 OTHER INCOME (LOSS), NET Other income, net, for the year ended December 31, 2023 was $3,479,000, an increase of $4,137,000, compared to an other loss, net, of $658,000 for the year ended December 31, 2022.
In addition to this write-off, the Company had multiple additional asset disposals for a gain of $66,000, resulting in a net loss on disposal of assets of $157,000 for the year ended December 31, 2023 .
In the event that additional purse revenue is secured within the next five years through additional forms of gaming at the Company, new revenue streams, or legislative action, the Company will be eligible for reimbursement of the actual 2024 overpayment amount from those purse supplements. 25 The Company is periodically involved in various claims and legal actions arising in the normal course of business.
In the event that additional purse revenue is secured within the five years following the 2025 live race meet through additional forms of gaming at the Company, new revenue streams, or legislative action, the Company will be eligible for reimbursement of the actual 2024 overpayment amount from those purse supplements.
Net cash used in financing activities for 2022 was $1,435,000 primarily due to the reinstituted quarterly cash dividend as well as payments for taxes of equity awards, partially offset by proceeds from the issuance of common stock.
CASH FLOWS FROM FINANCING ACTIVITIES Net cash used in financing activities for 2024 was $1,293,000 primarily due to cash dividends paid to shareholders and payments for taxes of equity awards, partially offset by proceeds from the issuance of common stock.
The following table sets forth a reconciliation of net income, a GAAP financial measure, to EBITDA and Adjusted EBITDA (defined above), which are non-GAAP measures, for the years ended: SUMMARY OF EBITDA DATA Year Ended December 31, 2023 2022 NET INCOME $ 10,563,249 $ 7,512,946 Interest income, net (1,978,122 ) (909,958 ) Income tax expense 4,417,000 2,721,800 Depreciation 3,145,372 2,981,168 EBITDA 16,147,499 12,305,956 Stock-based compensation 1,378,373 1,068,366 Loss on disposal of assets 157,160 157,435 Gain on sale of land (6,489,976 ) (12,151 ) Gain on insurance proceeds related to equity investments (4,227,701 ) — Depreciation and amortization related to equity investments 1,753,256 1,782,870 Interest expense related to equity investments 1,727,192 907,099 ADJUSTED EBITDA $ 10,445,803 $ 16,209,575 Adjusted EBITDA decreased $5,764,000, or 35.6%, for 2023 compared to 2022.
The following table sets forth a reconciliation of net income, a GAAP financial measure, to EBITDA and Adjusted EBITDA (defined above), which are non-GAAP measures, for the years ended: SUMMARY OF EBITDA DATA Year Ended December 31, 2024 2023 NET INCOME $ 2,112,842 $ 10,563,249 Interest income, net (2,071,511 ) (1,978,122 ) Income tax expense 923,885 4,417,000 Depreciation and amortization 3,620,899 3,145,372 EBITDA 4,586,115 16,147,499 Stock-based compensation 1,447,009 1,378,373 Loss on disposal of assets 49,214 157,160 Gain on transfer/sale of land (1,732,353 ) (6,489,976 ) Gain on insurance proceeds related to equity investments — (4,227,701 ) Depreciation and amortization related to equity investments 3,086,695 1,753,256 Interest expense related to equity investments 2,796,932 1,727,192 ADJUSTED EBITDA $ 10,233,612 $ 10,445,803 Adjusted EBITDA decreased $212,000, or 2.0%, for 2024 compared to 2023 .
Estimate of the allowance for doubtful accounts - Property Tax Increment Financing "TIF" Receivable As of December 31, 2023, the Company recorded a TIF receivable of approximately $13,973,000, which represents $11,307,000 of principal and $2,666,000 of interest.
Estimate of the allowance for doubtful accounts - Property Tax Increment Financing “ TIF” Receivable As of December 31, 2024 , the Company recorded a TIF receivable of approximately $18,898,000, which represents $15,551,000 of principal and $3,347,000 of interest.
The agreement was amended as of February 28, 2021 to extend the maturity date to January 31, 2024 and increase its revolving credit line up to $10,000,000. The line of credit was collateralized by all receivables, inventory, equipment, and general intangibles of the Company, as well as a mortgage on certain real property.
The Company has a general credit and security agreement with a financial institution. The agreement was amended as of February 28, 2021 to extend the maturity date to January 31, 2024 and increase its revolving credit line up to $10,000,000.
The amounts charged to operations for totalizator expenses for the years ended December 31, 2023 and 2022 were $205,000 and $253,000, respectively. In August 2018, the Company entered into a Contract for Private Redevelopment with the City of Shakopee in connection with a Tax Increment Financing District (“TIF District”) which was amended in September 2021.
In August 2018, the Company entered into a Contract for Private Redevelopment with the City of Shakopee in connection with a Tax Increment Financing District (“TIF District”) which was amended in September 2021.
Minnesota Breeders’ Purse Expense Fund Expense 2023 2022 2023 2022 Casino $ 4,797,000 $ 4,852,000 $ 533,000 $ 539,000 Simulcast Racing 1,435,000 1,477,000 442,000 482,000 Live Racing 1,368,000 2,201,000 79,000 98,000 Total $ 7,600,000 $ 8,530,000 $ 1,054,000 $ 1,119,000 Salaries and benefits expense increased $1,136,000, or 4.7%, in 2023 compared to 2022 .
Minnesota Breeders’ Purse Expense Fund Expense 2024 2023 2024 2023 Casino $ 4,668,000 $ 4,797,000 $ 519,000 $ 533,000 Simulcast Racing 1,335,000 1,435,000 428,000 442,000 Live Racing 1,905,000 1,368,000 81,000 79,000 Total $ 7,908,000 $ 7,600,000 $ 1,028,000 $ 1,054,000 Salaries and benefits expense increased $651,000, or 2.6%, in 2024 compared to 2023 .
As indicated, the Company received its remaining employee retention credit receivable in 2023. OPERATIONS REVIEW YEAR ENDED December 31, 2023 COMPARED TO YEAR ENDED December 31, 2022 EBITDA represents earnings before interest income, income tax expense, depreciation, and amortization.
OPERATIONS REVIEW YEAR ENDED December 31, 2024 COMPARED TO YEAR ENDED December 31, 2023 EBITDA represents earnings before interest income, net, income tax expense, depreciation, and amortization.
For the year ended December 31, 2022, Adjusted EBITDA excluded from EBITDA stock-based compensation (which includes the Company's 401(k) match in stock contribution), the gain on saleof land, loss on disposal of assets, and depreciation, and amortization and interest related to equity investments.
Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of our business and provides a perspective on the current effects of operating decisions For the year ended December 31, 2024 , Adjusted EBITDA excluded from EBITDA stock-based compensation (which includes the Company's 401(k) match in Company stock contribution), the gain on transfer of land, loss on disposal of assets, and depreciation and amortization and interest related to equity investments.
The Company had no borrowings under the credit line during the year ended December 31, 2023 . As of December 31, 2023 , the outstanding balance on the line of credit was $0. The credit agreement contains covenants requiring the Company to maintain certain financial ratios. The Company was in compliance with these requirements at all times throughout 2023 .
The credit agreement contains covenants requiring the Company to maintain certain financial ratios. The Company was in compliance with these requirements at all times throughout 2024 .
An explanation of changes in specific categories of operating expense is set forth below. Total operating expenses as a percentage of net revenues increased to 91.8% in 2023 from 83.7% in 2022 , which was a result of decreased net revenues for 2023 as compared to 2022. Total purse expense decreased $930,000, or 10.9%, in 2023 compared to 2022 .
Total operating expenses as a percentage of net revenues increased to 92.4% in 2024 from 91.8% in 2023 , which was a result of increased operating expenses for 2024 as compared to 2023. Total purse expense increased $308,000, or 4.1%, in 2024 compared to 2023 .
STRATEGIC OVERVIEW Canterbury Park Holding Corporation (the “Company,” “we,” “our,” or “us”) hosts pari-mutuel wagering on thoroughbred and quarter horse races and “unbanked” card games at its Canterbury Park Racetrack and Casino facility (the “Racetrack”) in Shakopee, Minnesota, which is approximately 20 miles southwest of downtown Minneapolis.
Our actual results could differ materially from those anticipated in the forward-looking statements included in this discussion as a result of certain factors, including, but not limited to, those discussed in “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K. 16 STRATEGIC OVERVIEW Canterbury Park Holding Corporation (the “Company,” “we,” “our,” or “us”) hosts pari-mutuel wagering on thoroughbred and quarter horse races and “unbanked” card games at its Canterbury Park Racetrack and Casino facility (the “Racetrack”) in Shakopee, Minnesota, which is approximately 20 miles southwest of downtown Minneapolis.
Our effective tax rate was 29.5% a nd 26.6% for 2023 and 2022, respectively. Net income for the years 2023 and 2022 was $10,563,000 an d $7,513,000, respectively. CRITICAL ACCOUNTING ESTIMATES The preparation of the Consolidated Financial Statements in accordance with GAAP requires us to make estimates and judgments that are subject to an inherent degree of uncertainty.
The Company recorded net income of $10,563,000, or $2.15 per basic and $2.13 per diluted share for 2023. 19 CRITICAL ACCOUNTING ESTIMATES The preparation of the Consolidated Financial Statements in accordance with GAAP requires us to make estimates and judgments that are subject to an inherent degree of uncertainty.
There were no unpaid purse fund obligations due to the MHBPA at December 31, 2023 or 2022 . In March 2014, the Company entered into a seven-year agreement with a new totalizator provider, which was extended an additional year in 2021. In March 2022, the Company entered into a five-year agreement with a new totalizator provider.
There were no unpaid purse fund obligations due to the MNHBPA at December 31, 2024 or 2023 . In March 2022, the Company entered into a five-year agreement with a totalizator provider. Pursuant to the agreement, the vendor provides totalizator equipment and related software which records and processes all wagers and calculates odds and payoffs.
For 2023, Adjusted EBITDA as a percentage of net revenue was 17.0%. For 2022, Adjusted EBITDA as a percentage of net revenue was 24.3%. 22 REVENUES Total net revenues for 2023 were $61,437,000, a decrease of $5,387,000, or 8.1%, compared to total net revenues of $66,824,000 for 2022.
For 2024 , Adjusted EBITDA as a percentage of net revenue was 16.6%. For 2023 , Adjusted EBITDA as a percentage of net revenue was 17.0%. 17 REVENUES Total net revenues for 2024 were $61,562,000, an increase of $125,000, or 0.2%, compared to total net revenues of $61,437,000 for 2023 .
This was partially offset by proceeds received from the sale of land $1,160,000 and cash dividends received from investments of $337,000.
This was partially offset by proceeds from the sale of short-term investments of $7,000,000.
This $9,736,000 increase consisted of $11,537,000 of net cash provided by operating activities in 2023, offset by $455,000 of net cash used in financing activities in 2023 and $1,345,000 of net cash used in investing activities in 2023.
This $12,155,000 decrease consisted of $6,488,000 of net cash provided by operating activities in 2024, offset by $17,349,000 of net cash used in investing activities in 2024 and $1,293,000 of net cash used in financing activities in 2024.
The Company has committed to payment of statutory distributions under a $500,000 bond issued to the MRC as required under Minnesota law. The Company was not required to make any payments related to this bond in 2023 or 2022 , and there is no liability related to this bond on the balance sheet as of December 31, 2023 .
The Company has committed to payment of statutory distributions under a $500,000 bond issued to the MRC as required under Minnesota law.
The decrease in revenue in 2023 compared to 2022 is primarily due to a decrease in live race days year-over-year (53 race days in 2023 compared to 64 race days in 2022) as well as decreased guest fees from out-state-handle on our live racing product on a per day basis due to decreased field size. 23 FOOD AND BEVERAGE REVENUES Food and beverage revenue decreased $398,000, or 4.8%, to $7,829,000 for the year ended December 31, 2023 compared to 2022 .
The slight decrease in revenue in 2024 compared to 2023 is primarily due to a decrease in simulcast handle, somewhat offset by increased guest fees from out-state-handle on our live racing product on a per day basis due to increased field size and one additional live race day.
Net cash used in investing activities for 2022 of $9,275,000 was used primarily for additions to land, buildings, and equipment of $4,997,000, an increase in related party receivable of $377,000, purchases of short-term investments of $5,000,000, and an equity investment contribution of $398,000.
CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities for 2024 of $17,349,000 was used primarily for additions to land, buildings, and equipment of $11,984,000, primarily related to our barn relocation and redevelopment plan, additions for TIF eligible improvements of $4,244,000, an increase in related party receivable of $1,218,000, primarily due to additional member loans and interest related to the member loans, and purchases of short-term investments of $7,000,000.
Casino revenue represented 64.8% and 60.2% of the Company’s net revenues for the years ended December 31, 2023 and 2022, respectively. Total Casino revenue decreased $438,000, or 1.1%, in 2023 compared to 2022.The decrease is primarily due to a decrease in live race days year-over-year.
Casino revenue represented 63.0% and 64.8% of the Company’s net revenues for the years ended December 31, 2024 and 2023 , respectively.
Pursuant to the agreement, the vendor provides totalizator equipment and related software that records and processes all wagers and calculates odds and payoffs. Under the new agreement, $166,400 was charged to operations in 2023. The future minimum purchase obligations under the new agreement are $166,400 per year for each of the next four years.
The future minimum purchase obligations under the new agreement are $166,400 per year. The amounts charged to operations for totalizator expenses for the years ended December 31, 2024 and 2023 w ere $200,000 and $205,000, res pectively.
We also compute Adjusted EBITDA, a non-GAAP measure, which reflects additional adjustments to EBITDA to eliminate unusual or non-recurring items, as well as items relating to our real estate development operations.
We also present Adjusted EBITDA, a non-GAAP measure, as a supplemental disclosure because we believe it enables investors to understand and assess our core operating results excluding the effect of unusual or non-recurring items, as well as items relating to our real estate development operations, allowing greater transparency related to a significant measure used by management in its financial and operational decision-making.
The decrease in food and beverage revenues is primarily due to Twin Cities Summer Jam not taking place in 2023 as it did during the third quarter of 2022. OTHER REVENUES Other revenue, consisting of admission revenues, corporate sponsorships, space rentals, and other miscellaneous activities, decreased $1,847,000, or 24.9%, to $5,573,000 in 2023 compared to 2022 .
OTHER REVENUES Other revenues, consisting of admission revenues, corporate sponsorships, space rentals, and other miscellaneous activities, increased $1,020,000, or 18.3%, to $6,593,000 in 2024 compared to 2023 .
Removed
Our actual results could differ materially from those anticipated in the forward-looking statements included in this discussion as a result of certain factors, including, but not limited to, those discussed in “Risk Factors” and “Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K.
Added
Total Casino revenue decreased $1,006,000, or 2.5%, in 2024 compared to 2023 .The decrease can be primarily attributed to both a decrease in drop and a lower average collection revenue rate in table games, somewhat offset by an increase in our other table games revenue related to our progressive jackpot administration revenue.
Removed
The Taxpayer Certainty and Disaster Tax Relief Act (the “Relief Act”), enacted on December 27, 2020, amended, and extended the ERC. The Relief Act extended and enhanced the ERC for qualified wages paid after December 31, 2020 through June 30, 2021.
Added
FOOD AND BEVERAGE REVENUES Food and beverage revenues increased $139,000, or 1.8%, to $7,968,000 for the year ended December 31, 2024 compared to 2023 . The increase in food and beverage revenues is primarily due to increased catering operations related to hosting large scale special events as well as the one additional live race day year-over-year mentioned above.
Removed
Under the Relief Act, eligible employers may claim a refundable tax credit against certain employment taxes equal to 70% of the qualified wages an eligible employer pays to employees after December 31, 2020 through June 30, 2021.
Added
The increase is primarily due to admission revenue increases related to our first ever rodeo, our first comedy series, and our live racing events. 18 OPERATING EXPENSES Total operating expenses increased $436,000, or 0.8%, to $56,862,000 in 2024 , from $56,426,000 in 2023 . An explanation of changes in specific categories of operating expense is set forth below.
Removed
The purpose of the ERC is to encourage employers to keep employees on the payroll, even if they are not working during the covered period because of the coronavirus outbreak. The Company qualified for federal government assistance through the ERC provisions for the second, third, and fourth quarters of 2020, as well as the first and second quarters of 2021.
Added
The increase is primarily due to the expenses incurred as part of our recruiting and participation incentives paid in 2024 under our annual live race meet and purse fund contribution agreement dated December 21, 2023. See Note 9 fo r further details of the agreement. No recruiting and participation incentives are planned for the 2025 live race meet.
Removed
We recognize government grants for which there is a reasonable assurance of compliance with grant conditions and receipt of credits. The Company's expected one-time refunds at December 31, 2023 and 2022 were $0 and $6,103,236, respectively, and are included on the Consolidated Balance Sheets as an employee retention credit receivable.
Added
The table below notes the various components of both purse expense and the Minnesota Breeders' Fund expense.
Removed
The decrease is primarily due to the expiration of the CMA as marketing funds received from the agreement were used and subsequently recorded in other revenues as well as being recorded as operating expenses, primarily advertising and marketing. OPERATING EXPENSES Total operating expenses increased $483,000, or 0.9%, to $56,426,000 in 2023 , from $55,943,000 in 2022 .
Added
The increase is primarily due to the increased food and beverage revenues related to increased catering operations as noted above. Depreciation and amortization increased $476,000, or 15.1%, in 2024 compared to 2023 .
Removed
The decrease is due primarily to the decrease in pari-mutuel revenues. This also resulted in a decrease in Minnesota Breeders' Fund (the "MBF") expense (shown below).
Added
The increase is primarily due to placing larger fixed assets into service towards the second half of 2023 as well as placing assets into service related to the first and second phases of our barn relocation and redevelopment plan in the second quarter of 2024. Advertising and marketing costs decreased $719,000, or 34.8%, in 2024 compared to 2023 .
Removed
As discussed in greater detail in Item 1 above, Minnesota law requires us to allocate a portion of Casino revenues, wagering handle on simulcast and live horse races, and ADW source market fees for future payment as purses for live horse races and other authorized uses.
Added
The decrease is primarily due to intentionally reducing overall spend in an effort to reduce costs. Professional and contracted service expenses decreased $320,000, or 5.4%, in 2024 compared to 2023. The decrease is primarily due to higher costs in 2023 related to long-term strategic growth initiatives.
Removed
While most of these amounts were paid into the purse funds for thoroughbred and quarter horse races, Minnesota law requires that a portion of the amounts allocated for purses be paid into the MBF.

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