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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-33998
Churchill Downs Inc orporated
(Exact name of registrant as specified in its charter)
Kentucky
61-0156015
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
600 North Hurstbourne Parkway, Suite 400
Louisville, Kentucky
40222
(Address of Principal Executive Offices)
(Zip Code)
( 502 ) 636-4400
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, No Par Value CHDN The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☐      No    ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒ No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐   No   ☒
The number of shares outstanding of registrant’s common stock at April 15, 2020 was 39,434,743 shares.



CHURCHILL DOWNS INCORPORATED
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended March 31, 2020
 

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
Three Months Ended March 31,
(in millions, except per common share data) 2020 2019
Net revenue:
Churchill Downs $ 23.5     $ 21.0    
Online Wagering 67.3     63.1    
Gaming 147.6     168.8    
All Other 14.5     12.5    
Total net revenue 252.9     265.4    
Operating expense:
Churchill Downs 26.6     23.4    
Online Wagering 50.1     45.1    
Gaming 124.8     125.0    
All Other 21.1     15.5    
Selling, general and administrative expense 24.1     24.9    
Impairment of intangible assets 17.5     —    
Transaction expense, net 0.3     3.5    
Total operating expense 264.5     237.4    
Operating (loss) income ( 11.6 )   28.0    
Other income (expense):
Interest expense, net ( 19.3 )   ( 13.7 )  
Equity in (loss) income of unconsolidated affiliates ( 3.3 )   4.1    
Total other expense ( 22.6 )   ( 9.6 )  
(Loss) income from continuing operations before provision for income taxes
( 34.2 )   18.4    
Income tax benefit (provision) 11.6     ( 6.5 )  
(Loss) income from continuing operations, net of tax ( 22.6 )   11.9    
Loss from discontinued operations, net of tax ( 0.9 )   ( 0.3 )  
Net (loss) income ( 23.5 )   11.6    
Net loss attributable to noncontrolling interest ( 0.1 )   —    
Net (loss) income and comprehensive (loss) income attributable to CDI $ ( 23.4 )   $ 11.6    
Net (loss) income per common share data - basic:
Continuing operations $ ( 0.57 )   $ 0.30    
Discontinued operations $ ( 0.02 )   $ ( 0.01 )  
Net (loss) income per common share data - basic $ ( 0.59 )   $ 0.29    
Net (loss) income per common share data - diluted:
Continuing operations $ ( 0.57 )   $ 0.30    
Discontinued operations $ ( 0.02 )   $ ( 0.01 )  
Net (loss) income per common share data - diluted $ ( 0.59 )   $ 0.29    
Weighted average shares outstanding:
Basic 39.7     40.4    
Diluted 39.7     40.6    
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
3

CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions) March 31, 2020 December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$ 700.9     $ 96.2    
Restricted cash
43.6     46.3    
Accounts receivable, net
36.5     37.3    
Income taxes receivable
25.2     14.5    
Other current assets
36.8     26.9    
Total current assets 843.0     221.2    
Property and equipment, net
990.8     937.3    
Investment in and advances to unconsolidated affiliates
630.0     634.5    
Goodwill
367.1     367.1    
Other intangible assets, net
351.1     369.8    
Other assets
21.8     21.1    
Total assets $ 3,203.8     $ 2,551.0    
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 80.6     $ 57.8    
Accrued expenses and other current liabilities 161.4     173.4    
Current deferred revenue
98.1     42.5    
Current maturities of long-term debt
4.0     4.0    
Dividends payable
—     23.5    
Total current liabilities 344.1     301.2    
Long-term debt, net of current maturities and loan origination fees
1,071.6     384.0    
Notes payable, net of debt issuance costs
1,086.3     1,085.9    
Non-current deferred revenue 16.7     16.7    
Deferred income taxes
210.9     212.8    
Other liabilities
38.6     39.4    
Total liabilities 2,768.2     2,040.0    
Commitments and contingencies
Shareholders' equity:
Preferred stock
—     —    
Common stock
—     —    
Retained earnings
433.9     509.2    
Accumulated other comprehensive loss
( 0.9 )   ( 0.9 )  
Total Churchill Downs Incorporated shareholders' equity 433.0     508.3    
Noncontrolling interest 2.6 2.7
Total shareholders' equity 435.6     511.0    
Total liabilities and shareholders' equity $ 3,203.8     $ 2,551.0    
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
4

CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Three Months Ended March 31, 2020
Common Stock Retained
Earnings 		Accumulated Other Comprehensive Loss Noncontrolling Interest Total Shareholders' Equity
(in millions, except per common share data) Shares Amount
Balance, December 31, 2019 39.7 $ —     $ 509.2     $ ( 0.9 )   $ 2.7     $ 511.0    
Net loss ( 23.4 )   ( 0.1 )   ( 23.5 )  
Repurchase of common stock ( 0.3 )   ( 4.3 )   ( 23.6 )   ( 27.9 )  
Cash settlement of stock awards ( 12.7 )   ( 12.7 )  
Taxes paid related to net share settlement of stock awards ( 15.1 )   ( 15.1 )  
Stock-based compensation 4.3 4.3    
Adoption of ASC 326 ( 0.5 )   ( 0.5 )  
Balance, March 31, 2020 39.4     $ —     $ 433.9     $ ( 0.9 )   $ 2.6     $ 435.6    

Three Months Ended March 31, 2019
Common Stock Retained
Earnings 		Accumulated Other Comprehensive Loss Noncontrolling Interest Total Shareholders' Equity
(in millions, except per common share data) Shares Amount
Balance, December 31, 2018 40.4     $ —     $ 474.2     $ ( 0.9 )   $ —     $ 473.3    
Net income 11.6     11.6    
Issuance of common stock 0.1     —    —   
Repurchase of common stock ( 0.3 )   ( 4.7 )   ( 20.3 )   ( 25.0 )  
Taxes paid related to net share settlement of stock awards ( 0.1 )   —    ( 7.6 )   ( 7.6 )  
Issuance of restricted stock awards, net of forfeitures 0.1     —    —   
Stock-based compensation 4.7     4.7    
Adoption of ASC 842 ( 0.3 )   ( 0.3 )  
Other 0.2     0.2    
Balance, March 31, 2019 40.2     $ —     $ 457.8     $ ( 0.9 )   $ —     $ 456.9    
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
5

CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
(in millions) 2020 2019
Cash flows from operating activities:
Net (loss) income $ ( 23.5 )   $ 11.6    
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 22.0     20.8    
Distributions from unconsolidated affiliates 1.3     6.0    
Equity in loss (income) of unconsolidated affiliates 3.3     ( 4.1 )  
Stock-based compensation 4.3     4.7    
Deferred income taxes ( 1.9 )   6.4    
Impairment of intangible assets 17.5     —    
Amortization of operating lease assets 1.2     —   
Other 0.9     0.4    
Changes in operating assets and liabilities, net of business acquisitions and dispositions:
Income taxes ( 10.7 )   0.3    
Deferred revenue 53.4     46.2    
Other assets and liabilities ( 24.3 )   ( 22.0 )  
Net cash provided by operating activities 43.5     70.3    
Cash flows from investing activities:
Capital maintenance expenditures ( 9.0 )   ( 13.9 )  
Capital project expenditures ( 39.3 )   ( 14.2 )  
Acquisition of businesses, net of cash acquired —     ( 171.3 )  
Investments in and advances to unconsolidated affiliates —     ( 409.8 )  
Other —     ( 9.9 )  
Net cash used in investing activities ( 48.3 )   ( 619.1 )  
Cash flows from financing activities:
Proceeds from borrowings under long-term debt obligations 719.8     1,231.9    
Repayments of borrowings under long-term debt obligations ( 32.4 )   ( 632.9 )  
Payment of dividends ( 23.4 )   ( 22.2 )  
Repurchase of common stock ( 28.4 )   ( 26.5 )  
Cash settlement of stock awards ( 12.7 )   —    
Taxes paid related to net share settlement of stock awards ( 15.1 )   ( 7.6 )  
Debt issuance costs ( 0.9 )   ( 7.5 )  
Other ( 0.1 )   ( 2.3 )  
Net cash provided by financing activities 606.8     532.9    
Net increase in cash, cash equivalents and restricted cash 602.0     ( 15.9 )  
Cash, cash equivalents and restricted cash, beginning of period 142.5     173.3    
Cash, cash equivalents and restricted cash, end of period $ 744.5     $ 157.4    
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
6

CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)

Three Months Ended March 31,
(in millions) 2020 2019
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 16.6     $ 18.8    
Income taxes 0.5     0.5    
Schedule of non-cash investing and financing activities:
Deferred tax liability assumed from equity investment $ —     $ 103.2    
Property and equipment additions included in accounts payable and accrued expenses
36.5     3.7    
Repurchase of common stock included in accrued expenses —     1.0    
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
7
Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)


1. DESCRIPTION OF BUSINESS
Basis of Presentation
The Churchill Downs Incorporated (the "Company", "we", "us", "our") financial statements are presented in conformity with the requirements of this Quarterly Report on Form 10-Q and consequently do not include all of the disclosures normally required by U.S. generally accepted accounting principles ("GAAP") or those normally made in our Annual Report on Form 10-K. The December 31, 2019 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP.
The following information is unaudited. All per share amounts assume dilution unless otherwise noted. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019.
In the opinion of management, all adjustments necessary for a fair statement of this information have been made, and all such adjustments are of a normal, recurring nature.
We conduct our business through three reportable segments: Churchill Downs, Online Wagering, and Gaming. We aggregate our other businesses as well as certain corporate operations, and other immaterial joint ventures, in All Other. We report net revenue and operating expense associated with these reportable segments in the accompanying condensed consolidated statements of comprehensive income.
Recent Developments Regarding COVID-19
In recent months, a new strain of coronavirus (COVID-19) has spread to many countries in the world, including the United States, and the outbreak has been declared a pandemic by the World Health Organization. The U.S. Secretary of Health and Human Services has also declared a public health emergency in the United States in response to the outbreak. Considerable uncertainty still surrounds the COVID-19 virus and its potential effects, and the extent of and effectiveness of responses taken on international, national and local levels. Measures taken to limit the impact of COVID-19, including shelter-in-place orders, social distancing measures, travel bans and restrictions, and business and government shutdowns, have already resulted in significant negative economic impacts in the United States and in relation to our business. The long-term impact of COVID-19 on the United States and world economies remains uncertain, the duration and scope of which cannot currently be predicted.
In response to the measures taken to limit the impact of COVID-19 described above, and for the protection of our employees, customers, and communities, we have temporarily closed or suspended operations at the following properties, effective as of the following dates:
Churchill Downs
• Simulcast operations at Churchill Downs Racetrack on March 15, 2020.
• Derby City Gaming on March 15, 2020.
Gaming
Wholly-Owned Properties
• Calder Casino and Racing ("Calder") on March 16, 2020.
• Fair Grounds Slots and Video Services, LLC ("VSI") on March 16, 2020.
• Fair Grounds Race Course conducted spectator-free live racing, including the Louisiana Derby, from March 13, 2020 through March 21, 2020 and canceled the remainder of racing dates.
• Harlow's Casino Resort and Spa ("Harlow's") on March 16, 2020.
• Ocean Downs Casino and Racetrack ("Ocean Downs") on March 15, 2020.
• Oxford Casino and Hotel ("Oxford") on March 16, 2020.
• Presque Isle Downs and Casino ("Presque Isle") on March 16, 2020.
• Riverwalk Casino Hotel ("Riverwalk") on March 16, 2020.
Managed Properties
• Lady Luck Casino Nemacolin ("Lady Luck Nemacolin") on March 16, 2020.
Equity Investments
• Rivers Casino Des Plaines ("Rivers Des Plaines") on March 15, 2020.
• Miami Valley Gaming and Racing ("MVG") on March 14, 2020.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
8
Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)

All Other
• Arlington International Racecourse ("Arlington") off track betting facilities ("OTBs") and simulcast operations on March 16, 2020.
• Turfway Park conducted spectator-free live racing from March 12, 2020 through March 25, 2020 and canceled the remainder of racing dates.
On March 25, 2020, as a result of the temporary closures and suspended operations described above, the Company announced the temporary furlough of employees at its wholly-owned gaming properties and certain wholly-owned racing operations. The Company is continuing to provide health, dental, vision and life insurance benefits to furloughed employees at our wholly-owned properties. The Company also implemented a salary reduction for all remaining non-furloughed salaried employees based on a percentage that varies dependent upon the amount of each employee’s salary. The most senior level of executive management has received the largest salary decrease, based on both percentage and dollar amount. The salary reductions will remain in effect until the Company begins to return to normalized operations.
There have been a number of other aspects of our business that have been impacted by COVID-19 during the three months ended March 31, 2020, including the following:
• The Company rescheduled the 146th Kentucky Oaks and Derby from May 1-2, 2020 to September 4-5, 2020.
• Starting in mid-February 2020, U.S. and international sporting events were cancelled, which reduced our sports betting options for our customers.
• Horse racing content for wagering on our TwinSpires business ("TwinSpires") decreased, although handle increased as our customers wagered more on the content that was available.
Financial Status and Outlook
The Company has temporarily reduced its planned maintenance and project capital expenditures for 2020 as a result of the temporary property and operations closures and our prioritization of capital investments based on the highest near-term return opportunities in order to maintain financial flexibility.
On March 16, 2020, we borrowed $ 675.4  million on our revolving credit facility (the "Revolver") pursuant to the Credit Agreement (defined below) to provide the Company with additional financial flexibility, which provided the Company with $ 700.9  million of cash and cash equivalents as of March 31, 2020. The Company was in compliance with all applicable covenants in the Credit Agreement at March 31, 2020.
On April 28, 2020, the Company entered into a Second Amendment to its Credit Agreement, which (i) provides for a financial covenant relief period through the date on which the Company delivers its quarterly financial statements and compliance certificate for the fiscal quarter ending June 30, 2021, subject to certain exceptions (the “Financial Covenant Relief Period”), (ii) amends the definition of “Consolidated EBITDA” in the Credit Agreement with respect to the calculation of Consolidated EBITDA for the first two fiscal quarters after the termination of the Financial Covenant Relief Period, (iii) extends certain deadlines and makes certain other amendments to the Company’s financial reporting obligations, (iv) places certain restrictions on restricted payments during the Financial Covenant Relief Period, and (v) amends the definitions of “Material Adverse Effect” and “License Revocation” in the Credit Agreement to take into consideration COVID-19.
During the Financial Covenant Relief Period, the Company will not be required to comply with its existing consolidated total secured net leverage ratio financial covenant and the interest coverage ratio financial covenant. The Company has agreed to a minimum liquidity financial covenant that requires the Company and its restricted subsidiaries to maintain liquidity of at least $ 150.0  million during the Financial Covenant Relief Period.
We continue to assess the situation at our properties and operations on a daily basis; however, we are unable to determine when we will be able to reopen our properties and operations and the conditions upon which we will reopen. Our second quarter of 2020 financial results will be materially impacted by the rescheduling of the Kentucky Oaks and Derby from the second quarter of 2020 to the third quarter of 2020, by the continued closure and suspended operations of our wholly-owned gaming properties and certain wholly-owned racing operations, and by the continued closure of the casino properties related to our two equity investments.
Based on our current projected operating cash flow needs, interest and debt repayments, and revised maintenance and project capital expenditures, we believe we have adequate cash for at least the next twelve months to fund our business operations, meet all of our financial commitments, and invest in key growth capital projects.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
9
Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Acquisitions of Presque Isle and Lady Luck Nemacolin
On January 11, 2019, we completed the acquisition of Presque Isle located in Erie, Pennsylvania from Eldorado Resorts, Inc. ("ERI") for cash consideration of $ 178.9 million (the "Presque Isle Transaction") and $ 1.6  million of working capital and other purchase price adjustments.
On March 8, 2019, the Company assumed management and acquired certain assets related to the management of Lady Luck Nemacolin in Farmington, Pennsylvania, from ERI for cash consideration of $ 100,000 (the "Lady Luck Nemacolin Transaction").
Acquisition of Certain Ownership Interests of Midwest Gaming Holdings, LLC
On March 5, 2019, the Company completed the acquisition of certain ownership interests of Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Des Plaines in Des Plaines, Illinois to acquire approximately 42 % of Midwest Gaming from affiliates and co-investors of Clairvest Group Inc. ("Clairvest") and members of High Plaines Gaming, LLC ("High Plaines"), an affiliate of Rush Street Gaming, LLC and Casino Investors, LLC ("Casino Investors") for cash consideration of approximately $ 406.6 million and $ 3.5  million of certain transaction costs and working capital adjustments (the "Sale Transaction"). Following the closing of the Sale Transaction, the parties completed a recapitalization transaction on March 6, 2019 (the "Recapitalization"), pursuant to which Midwest Gaming used approximately $ 300.0 million in proceeds from amended and extended credit facilities to redeem, on a pro rata basis, additional Midwest Gaming units held by High Plaines and Casino Investors. As a result of the Recapitalization, the Company's ownership of Midwest Gaming increased to 61.3 %. High Plaines retained ownership of 36.0 % of Midwest Gaming and Casino Investors retained ownership of 2.7 % of Midwest Gaming.
We also recognized a $ 103.2  million deferred tax liability and a corresponding increase in our investment in unconsolidated affiliates related to an entity we acquired in conjunction with our acquisition of the Clairvest ownership stake in Midwest Gaming.
Refer to Note 14, Investments in and Advances to Unconsolidated Affiliates, for further information on the Midwest Gaming transactions.
Turfway Park Acquisition
The Company completed the acquisition of Turfway Park from Jack Entertainment LLC ("JACK") and Hard Rock International (“Hard Rock”) on October 9, 2019 for total consideration of $ 46.0  million in cash ("Turfway Park Acquisition"). Turfway Park is located on 197 acres in Florence, Kentucky. The Company has announced plans and has begun to invest up to $ 150.0  million (including the Turfway Park Acquisition total consideration of $ 46.0  million) in a state-of-the-art live and historical thoroughbred racing facility at Turfway Park.
Refer to Note 4, Acquisitions, for further information on the Turfway Park Acquisition.
Seasonality
Churchill Downs
Due to the seasonal nature of our live racing business at Churchill Downs Racetrack, revenue and operating results for any interim quarter are generally not indicative of the revenues and operating results for the year and may not be comparable with results for the corresponding period of the previous year. Historically, the majority of our live racing revenue occurs during the second quarter with the running of the Kentucky Derby and Kentucky Oaks. However, as announced on March 17, 2020, due to the COVID-19 pandemic, the Company rescheduled the 146th Kentucky Oaks and Kentucky Derby from May 1, 2020 and May 2, 2020 to September 4, 2020 and September 5, 2020, respectively.
Online Wagering
Due to the seasonal nature of the racing business, revenue and operating results for any interim quarter are generally not indicative of the revenues and operating results for the year and may not be comparable with results for the corresponding period of the previous year. Historically, our revenue is higher in the second quarter with the running of the Kentucky Derby and the Kentucky Oaks. However, as announced on March 17, 2020, due to the COVID-19 pandemic, the Company rescheduled the 146th Kentucky Oaks and Kentucky Derby from May 1, 2020 and May 2, 2020 to September 4, 2020 and September 5, 2020, respectively.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
10
Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)

2. RECENT ACCOUNTING PRONOUNCEMENTS
Recent Accounting Pronouncement - Adopted on January 1, 2020
In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses, ("ASC 326") which introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new model will apply to: (1) loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, (2) loan commitments and certain other off-balance sheet credit exposures, (3) debt securities and other financial assets measured at fair value through other comprehensive income, and (4) beneficial interests in securitized financial assets. We adopted ASC 326 on January 1, 2020 using the modified retrospective approach. We recognized the cumulative effect of applying ASC 326 as an opening balance sheet adjustment at January 1, 2020. The comparative information has not been retrospectively adjusted and continues to be reported under the accounting standards in effect for those periods. The adoption of ASC 326 did not have a material impact on our business and therefore we have not included the disclosure requirements of ASC 326 in this Quarterly Report on Form 10-Q.
In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. This new guidance simplifies the accounting for goodwill impairments by removing step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. We adopted this guidance on January 1, 2020. The new guidance did not result in a cumulative adjustment upon adoption and the fair value of our Presque Isle reporting unit exceeded the carrying amount in our March 31, 2020 trigger event testing (refer to Note 7, Asset Impairment, for further information). As a result, there was no impairment recognized under the new guidance for the period ended March 31, 2020.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other: Internal-Use Software, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The new guidance also requires an entity to expense the capitalized implementation costs of a hosting arrangement over the term of the hosting arrangement. We adopted this guidance on January 1, 2020. This guidance is consistent with our current accounting policies, and therefore our adoption of this guidance did not have a material impact on our business.
3. SIGNIFICANT ACCOUNTING POLICIES
Except for the accounting policy for the allowance for doubtful accounts receivable described below, which was updated as a result of our adoption of ASC 326 on January 1, 2020, as described in Note 2, Recent Accounting Pronouncements, there have been no changes to our significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2019.
Allowance for Doubtful Accounts Receivable
Upon our adoption of ASC 326 on January 1, 2020, we maintained an allowance for doubtful accounts for current expected credit losses on our financial assets measured at amortized cost which are primarily included in accounts receivable, net in the accompanying condensed consolidated balance sheets. The Company evaluates current expected credit losses on a collective (pool) basis when similar risk characteristics exist. Write-offs are recognized when the Company concludes that all or a portion of a financial asset is no longer collectible. Any subsequent recovery is recognized when it occurs.
4. ACQUISITIONS
Turfway Park
On October 9, 2019, the Company completed the Turfway Park Acquisition for total consideration of $ 46.0  million. Of the total consideration paid, $ 36.0  million was allocated to JACK and accounted for as a business combination. The remaining $ 10.0  million was paid to Hard Rock for the assignment of the purchase and sale agreement rights and was accounted for separately from the business combination as an intangible asset and amortized through expense in the fourth quarter of 2019.

The cash purchase price paid to JACK was $ 36.0  million, less $ 0.9  million of working capital and purchase price adjustments. The preliminary fair values of the assets acquired and liabilities assumed, net of cash acquired of $ 0.6  million, at the date of acquisition were as follows: property and equipment (primarily land) of $ 18.8  million, indefinite-lived gaming rights of $ 9.8 million, indefinite-lived trademark of $ 5.5  million, goodwill of $ 3.0  million, and current liabilities of $ 2.6  million.

The Company has not included other disclosures regarding the Turfway Park Acquisition because the acquisition is immaterial to our business.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020
11
Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)

5. DISCONTINUED OPERATIONS
On November 29, 2017, the Company entered into a definitive Stock Purchase Agreement (the "Stock Purchase Agreement") to sell its mobile gaming subsidiary, Big Fish Games, Inc. ("Big Fish Games"), a Washington corporation, to Aristocrat Technologies, Inc. (the "Purchaser"), a Nevada corporation, an indirect, wholly owned subsidiary of Aristocrat Leisure Limited, an Australian corporation (the "Big Fish Transaction"). On January 9, 2018, pursuant to the Stock Purchase Agreement, the Company completed the Big Fish Transaction. The Purchaser paid aggregate consideration of $ 990.0  million in cash in connection with the Big Fish Transaction, subject to customary adjustments for working capital and indebtedness and certain other adjustments as set forth in the Stock Purchase Agreement.
The Big Fish Games segment and the related Big Fish Transaction meet the criteria for discontinued operation presentation. The condensed consolidated statements of comprehensive income and the notes to financial statements reflect Big Fish Games as discontinued operations for all periods presented. Unless otherwise specified, disclosures in these condensed consolidated financial statements reflect continuing operations only. The condensed consolidated statements of cash flows include both continuing and discontinued operations.
The following table presents the financial results of Big Fish Games included in "loss from discontinued operations, net of tax" in the accompanying condensed consolidated statements of comprehensive income:
Three Months Ended March 31,
(in millions) 2020 2019
Net revenue $ —     $ —    
Selling, general and administrative expense 1.2     0.4    
Loss from discontinued operations before provision for income taxes
( 1.2 )   ( 0.4 )  
Income tax benefit 0.3     0.1    
Loss from discontinued operations, net of tax $ ( 0.9 )   $ ( 0.3 )  

6. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill, by segment, is comprised of the following:
(in millions) Churchill Downs Online Wagering Gaming All Other Total
Balances as of December 31, 2019 $ 49.7     $ 148.2     $ 165.2     $ 4.0     $ 367.1    
Additions —     —     —     —     —    
Balances as of March 31, 2020 $ 49.7     $ 148.2     $ 165.2     $ 4.0     $ 367.1    
Other intangible assets are comprised of the following: