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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, 2023
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 Incorporated
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, No Par ValueCHDNThe 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 filerAccelerated filer
Non-accelerated filerSmaller 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 19, 2023 was 37,433,763 shares.



CHURCHILL DOWNS INCORPORATED
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended March 31, 2023
 
Condensed Consolidated Balance Sheets at March 31, 2023 and December 31, 2022

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
2


PART I.    FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS
CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended March 31,
(in millions, except per common share data)20232022
Net revenue:
Live and Historical Racing$214.4 $86.0 
TwinSpires94.8 100.3 
Gaming250.0 177.3 
All Other0.3 0.5 
Total net revenue559.5 364.1 
Operating expense:
Live and Historical Racing143.3 67.7 
TwinSpires65.7 74.9 
Gaming173.5 125.2 
All Other5.0 3.1 
Selling, general and administrative expense52.3 35.9 
Asset impairments 4.9 
Transaction expense, net(0.2)5.0 
Total operating expense439.6 316.7 
Operating income119.9 47.4 
Other income (expense):
Interest expense, net(64.7)(21.3)
Equity in income of unconsolidated affiliates38.3 32.5 
Gain on sale of Arlington114.0  
Miscellaneous, net1.4  
Total other income89.0 11.2 
Income from operations before provision for income taxes208.9 58.6 
Income tax provision(53.2)(16.5)
Net income$155.7 $42.1 
Net income per common share data:
Basic net income$4.14 $1.10 
Diluted net income$4.09 $1.08 
Weighted average shares outstanding:
Basic37.6 38.3 
Diluted38.1 38.8 
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
3


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions)March 31, 2023December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$173.9 $129.8 
Restricted cash
63.5 74.9 
Accounts receivable, net
74.0 81.5 
Income taxes receivable
 14.0 
Other current assets
66.1 44.3 
Total current assets377.5 344.5 
Property and equipment, net
2,095.4 1,978.3 
Investment in and advances to unconsolidated affiliates
651.9 659.4 
Goodwill
724.1 723.8 
Other intangible assets, net
2,390.6 2,391.8 
Other assets
34.0 27.0 
Long-term assets held for sale 82.0 
Total assets$6,273.5 $6,206.8 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$145.3 $145.5 
Accrued expenses and other current liabilities348.2 361.0 
Income taxes payable7.6 2.1 
Current deferred revenue
120.8 39.0 
Current maturities of long-term debt
72.0 47.0 
Dividends payable
0.5 27.0 
Total current liabilities694.4 621.6 
Long-term debt, net of current maturities and loan origination fees
1,872.8 2,081.6 
Notes payable, net of debt issuance costs
2,477.9 2,477.1 
Non-current deferred revenue11.8 11.8 
Deferred income taxes
374.0 340.8 
Other liabilities
138.4 122.4 
Total liabilities5,569.3 5,655.3 
Commitments and contingencies
Shareholders' equity:
Preferred stock  
Common stock4.7  
Retained earnings
700.4 552.4 
Accumulated other comprehensive loss
(0.9)(0.9)
Total shareholders' equity704.2 551.5 
Total liabilities and shareholders' equity$6,273.5 $6,206.8 
    
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
4


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Common StockRetained
Earnings
Accumulated Other Comprehensive LossTotal Shareholders' Equity
(in millions)SharesAmount
Balance, December 31, 202237.4$ $552.4 $(0.9)$551.5 
Net income155.7 155.7 
Repurchase of common stock(3.9)3.9 — 
Taxes paid related to net share settlement of stock awards(11.3)(11.3)
Stock-based compensation8.6 — 8.6 
Other(0.3)(0.3)
Balance, March 31, 202337.4$4.7 $700.4 $(0.9)$704.2 
Common StockRetained
Earnings
Accumulated Other Comprehensive LossTotal Shareholders' Equity
(in millions)SharesAmount
Balance, December 31, 202138.1 $ $307.7 $(0.9)$306.8 
Net income42.1 42.1 
Issuance of common stock0.1 — 
Repurchase of common stock(0.1)(7.0)(18.0)(25.0)
Taxes paid related to net share settlement of stock awards(0.1)(13.1)(13.1)
Stock-based compensation7.0 7.0 
Balance, March 31, 202238.0$ $318.7 $(0.9)$317.8 
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
5


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
(in millions)20232022
Cash flows from operating activities:
Net income $155.7 $42.1 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization37.9 25.1 
Distributions from unconsolidated affiliates45.8 40.6 
Equity in income of unconsolidated affiliates(38.3)(32.5)
Stock-based compensation8.6 7.0 
Deferred income taxes33.2 10.2 
Asset impairments 4.9 
Amortization of operating lease assets2.2 1.3 
Gain on sale of Arlington(114.0) 
Other0.8 1.2 
Changes in operating assets and liabilities:
Income taxes19.9 6.4 
Deferred revenue81.8 56.3 
Other assets and liabilities(17.7)(27.4)
Net cash provided by operating activities215.9 135.2 
Cash flows from investing activities:
Capital maintenance expenditures(11.8)(10.0)
Capital project expenditures(122.9)(45.5)
Proceeds from sale of Arlington195.7  
Other(6.5)(7.3)
Net cash provided by (used in) investing activities54.5 (62.8)
Cash flows from financing activities:
Proceeds from borrowings under long-term debt obligations615.5  
Repayments of borrowings under long-term debt obligations(797.5)(1.8)
Payment of dividends(26.7)(25.7)
Repurchase of common stock(0.5)(24.3)
Taxes paid related to net share settlement of stock awards (11.3)(13.1)
Debt issuance costs(2.5) 
Change in bank overdraft(14.2)(3.0)
Other(0.5)(0.1)
Net cash used in financing activities(237.7)(68.0)
Net increase in cash, cash equivalents and restricted cash32.7 4.4 
Cash, cash equivalents and restricted cash, beginning of period204.7 355.6 
Cash, cash equivalents and restricted cash, end of period$237.4 $360.0 
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
6


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Three Months Ended March 31,
(in millions)20232022
Supplemental disclosures of cash flow information:
Cash paid for interest$55.5 $20.7 
Cash paid for income taxes 0.8 0.1 
Cash received from income tax refunds0.7  
Schedule of non-cash operating, investing and financing activities:
Property and equipment additions included in accounts payable and accrued expenses$54.2 $29.9 
Debt issuance costs included in accrued expense and other current liabilities 0.73.2 
Right-of-use assets obtained in exchange for lease obligations in operating leases 0.5 0.9 
Right-of-use assets obtained in exchange for lease obligations in finance leases23.6  
Repurchase of common stock included in accrued expense and other current liabilities 0.7 
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
7

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. DESCRIPTION OF BUSINESS
Basis of Presentation
Churchill Downs Incorporated (the "Company", "we", "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, 2022 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, 2022.
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: Live and Historical Racing, TwinSpires, 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.
Arlington sale
On February 15, 2023, we closed on the sale of the Arlington International Racecourse property ("Arlington") located in Arlington Heights, Illinois. We sold 326-acres to the Chicago Bears for $197.2 million. For more information, refer to Note 4, Dispositions.
Acquisition of Peninsula Pacific Entertainment
On November 1, 2022, the Company completed the acquisition of substantially all of the assets of Peninsula Pacific Entertainment LLC ("P2E") with a base purchase price of $2.75 billion ("P2E Transaction") subject to working capital and other purchase price adjustments. The P2E assets acquired included Colonial Downs Racetrack ("Colonial Downs") and six Historical Racing Machine ("HRM") entertainment venues in Virginia, del Lago Resort & Casino in New York ("del Lago"), and Hard Rock Hotel & Casino in Iowa ("Hard Rock Sioux City"), as well as the development rights for the Dumfries and Emporia HRM facilities in Virginia, up to five additional HRM entertainment venues in Virginia, and the potential for ONE Casino and Resort in Virginia in collaboration with Urban One.
Refer to Note 3, Acquisitions for further information on the transaction.
Acquisitions of Chasers Poker Room and Ellis Park
On September 2, 2022, the Company completed the acquisition of Chasers Poker Room ("Chasers") in Salem, New Hampshire (the "Chasers Transaction"). As part of the transaction, we made an initial payment to the sellers for rights to operate the poker room and to build an HRM venue. Additional payments will be made once all necessary permits are obtained, and the planned historical racing entertainment venue is opened. The Company plans to develop an expanded charitable gaming facility in Salem to accommodate HRMs and table games.
On September 26, 2022, we completed the acquisition of Ellis Park Racing and Gaming ("Ellis Park") in Henderson, Kentucky, from Enchantment Holdings, LLC, an affiliate of Laguna Development Corporation, for total consideration of $79.0 million in cash, subject to certain working capital and other purchase price adjustments (the "Ellis Park Transaction").
Refer to Note 3, Acquisitions for further information on the transaction.
Impact of COVID-19 Pandemic
The extent to which the COVID-19 pandemic, including the emergence of variant strains, will continue to impact the Company remains uncertain and will depend on many factors that are not within our control. We will continue to monitor for new developments related to the pandemic and assess these developments to maintain continuity in our operations.
Exit of the Direct Online Sports and Casino Business
The Company has exited the direct online Sports and Casino business in every state except for Arizona. The Company plans to maintain its retail Sports operations and has monetized two of its online market access licenses.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
8

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
2. RECENT ACCOUNTING PRONOUNCEMENTS
Recent Accounting Pronouncements - effective in 2023 or thereafter
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions to applying the guidance on contract modifications, hedge accounting, and other transactions, and to simplify the accounting for transitioning from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance. In December 2022, the FASB deferred the date for which this guidance can be applied from December 31, 2022 to December 31, 2024. The use of LIBOR was phased out at the end of 2021, although the phase-out of U.S. dollar LIBOR for existing agreements has been delayed until June 2023. The Company will complete the transition of its financing from LIBOR to the Secured Overnight Financing Rate ("SOFR") by June 30, 2023. These transition activities will not have a material impact on the Company’s financial statements.
3. ACQUISITIONS
Chasers Poker Room
On September 2, 2022, the Company completed the Chasers Transaction which was treated as an asset acquisition because substantially all the value of the gross assets acquired was concentrated in the gaming rights. The Company made an initial payment at closing and recorded a liability for the remaining payments due on a future date. In conjunction with the acquisition, the Company recorded an $82.2 million gaming rights intangible asset which represented its fair value at the date of acquisition.
The fair value of the gaming rights acquired in the Chasers Transaction was determined using the Greenfield Method, which is an income approach methodology that calculates the present value of the gaming rights intangible asset based on a projected cash flow stream. This method assumes that the gaming rights intangible asset provides the opportunity to develop a gaming or historical racing facility in a specified region, and that the present value of the projected cash flows is a result of the realization of advantages contained in these rights. Under this methodology, the acquirer is expected to absorb all start-up costs, as well as incur all expenses pertaining to the acquisition and/or the creation of all tangible and intangible assets. The estimated future revenue, future operating expenses, start-up costs, and discount rate were the primary inputs in the valuation. The gaming rights intangible asset was assigned an indefinite useful life based on the Company's expected use of the asset and determination that no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of the gaming rights.
Ellis Park
On September 26, 2022, the Company completed the Ellis Park Transaction for total consideration of $79.0 million in cash, plus $3.5 million in working capital and other preliminary purchase price adjustments. The fair values of the Ellis Park Transaction were based upon preliminary valuations. Estimates and assumptions used in such valuations are subject to change, which could be significant, within the measurement period up to one year from the acquisition date. The areas of the preliminary valuations that are not yet finalized relate to the amounts for income taxes, working capital adjustments and the final amount of residual goodwill. The Company expects to continue to obtain information to assist in determining fair values of net assets acquired at the acquisition date during the measurement period. The preliminary fair values of the assets acquired and liabilities assumed, net of cash acquired of $1.4 million, at the date of acquisition were as follows: property and equipment of $19.3 million, indefinite-lived gaming rights of $47.4 million, indefinite-lived trademark of $3.6 million, goodwill of $9.5 million, and net working capital of $1.3 million.
The Company has not included other disclosures regarding the Chasers or Ellis Park Transactions as these transactions are immaterial to our business.
P2E Transaction
On November 1, 2022, the Company completed the acquisition of substantially all the assets of P2E for preliminary purchase consideration of $2,835.9 million, net of cash acquired. The P2E assets acquired included Colonial Downs and six HRM entertainment venues in Virginia, del Lago in New York, and Hard Rock Sioux City in Iowa, as well as the development rights for Dumfries and Emporia HRM facilities in Virginia, up to five additional HRM entertainment venues in Virginia, and the potential for ONE Casino & Resort in Virginia in collaboration with Urban One.
The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed, net of cash acquired of $126.4 million, as of November 1, 2022:
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
9

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(in millions)Total
Accounts receivable, net$9.8 
Other current assets7.2 
Property and equipment611.2 
Goodwill347.8 
Other intangible assets1,941.5 
Deferred taxes20.8 
Other assets16.0 
Total assets acquired$2,954.3 
Accounts payable4.0 
Accrued expenses and other current liabilities96.9 
Other liabilities assumed17.5 
Total liabilities assumed$118.4 
Net assets acquired (net of cash)$2,835.9 
The fair value of the intangible assets consists of the following:
(in millions)Fair Value Recognized
Gaming rights$1,865.6 
Trademark75.9 
Total intangible assets$1,941.5 
Current assets and current liabilities were valued at the existing carrying values, as these items are short term in nature and represent management's estimated fair value of the respective items at November 1, 2022.
The property and equipment acquired primarily relates to land, buildings, equipment, and furniture and fixtures. The fair value of the land was determined using the market approach and the fair values of the remaining property and equipment were primarily determined using the cost replacement method which is based on replacement or reproduction costs of the assets.
The fair value of the gaming rights was determined using the Greenfield Method, which is an income approach methodology that calculates the present value of the overall business enterprise based on a projected cash flow stream. This method assumes that the gaming rights intangible assets provide the opportunity to develop a casino or historical racing facility in a specified region, and that the present value of the projected cash flows are a result of the realization of advantages contained in these rights. Under this methodology, the acquirer is expected to absorb all start-up costs, as well as incur all expenses pertaining to the acquisition and/or the creation of all tangible and intangible assets. The estimated future revenue and operating expenses, start-up costs, and discount rates were the primary assumptions and estimates in the valuation of the gaming rights. The gaming rights intangible assets were assigned an indefinite useful life based on the Company's expected use of the assets and determination that no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of the gaming rights.
The trademark intangible assets were valued using the relief-from-royalty method of the income approach, which estimates the fair value of the intangible assets by discounting the fair value of the hypothetical royalty payments a market participant would be willing to pay to enjoy the benefits of the assets. The estimated future revenue, royalty rates, and discount rates were the primary assumptions and estimates in the valuation of the trademarks. The trademarks were assigned an indefinite useful life based on the Company’s intention to keep the trademarks for an indefinite period of time.
Goodwill of $347.8 million was recognized due to the expected contribution of P2E to the Company's overall business strategy. The goodwill was assigned to the Gaming segment in the amount of $129.1 million and to the Live and Historical Racing segment in the amount of $218.7 million and is mostly deductible for tax purposes.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
10

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Estimates and assumptions used in such valuations are subject to change, which could be significant, within the measurement period up to one year from the acquisition date. The preliminary purchase consideration is subject to adjustment upon finalization of customary post-closing adjustments related to working capital. The primary areas of the preliminary valuation that are not yet finalized relate to the fair values of amounts for income taxes, property and equipment, intangible assets, adjustments to working capital, and the final amount of residual goodwill. The Company expects to continue to obtain information to assist in determining fair values of net assets acquired at the acquisition date during the measurement period.
The following unaudited pro forma consolidated financial information for the Company has been prepared assuming the P2E Transaction had occurred as of January 1, 2021. The unaudited pro forma financial information is not necessarily indicative of either future results of operations or results of operations that might have been achieved had the acquisition been consummated as of January 1, 2021.
(in millions)Three months ended March 31, 2022
Net revenue$512.9 
Net income$41.3 
4. DISPOSITIONS
2023 Disposition
On February 15, 2023, we closed on the sale of the Arlington property in Arlington Heights, Illinois, to the Chicago Bears for $197.2 million. We received net proceeds of $195.7 million for the 326-acres and recognized a gain of $114.0 million on the sale, which is included in other income in the accompanying Condensed Consolidated Statements of Comprehensive Income. The Company has classified certain assets of Arlington totaling $82.0 million as held for sale as of December 31, 2022 on the accompanying Condensed Consolidated Balance Sheets. Arlington’s operations and assets are included in All Other in our consolidated results.
The Company executed a forward like-kind exchange transaction by purchasing certain property as part of the P2E Transaction for $197.2 million, which qualified as an Internal Revenue Code §1031 transaction. An exchange accommodation titleholder ("EAT"), a type of variable interest entity, was used to facilitate this reverse like-kind exchange. The Company determined that it is the primary beneficiary of the EAT, thus the property held by the EAT has been consolidated and recorded in Property and equipment, net on the Condensed Consolidated Balance Sheets.
As of March 31, 2023, the Company recorded a $27.8 million deferred tax liability related to the Arlington sale on the Condensed Consolidated Balance Sheets.
5. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill, by segment, is composed of the following:
(in millions)Live and HistoricalTwinSpiresGamingAll OtherTotal
Balances as of December 31, 2022$280.3 $152.2 $290.3 $1.0 $723.8 
Adjustments0.3    0.3 
Balances as of March 31, 2023$280.6 $152.2 $290.3 $1.0 $724.1 
Other intangible assets are comprised of the following:
March 31, 2023December 31, 2022
(in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Definite-lived intangible assets$31.0 $(22.6)$8.4 $31.0 $(21.4)$9.6 
Indefinite-lived intangible assets2,382.2 2,382.2 
Total$2,390.6 $2,391.8 
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
11

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
6. INCOME TAXES
The Company’s effective income tax rate for the three months ended March 31, 2023 was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes and non-deductible officer’s compensation.
The Company’s effective income tax rate for the three months ended March 31, 2022 was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes and non-deductible officer’s compensation. This expense was partially offset by tax benefits resulting from year-to-date tax deductions from vesting of restricted stock compensation in excess of book deductions.
7. SHAREHOLDERS’ EQUITY
Stock Repurchase Programs
On October 30, 2018, the Board of Directors of the Company approved a common stock repurchase program of up to $300.0 million ("2018 Stock Repurchase Program"). The 2018 Stock Repurchase Program was in effect until September 29, 2021 and had unused authorization of $97.9 million.
On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million ("2021 Stock Repurchase Program"). The 2021 Stock Repurchase Program includes and is not in addition to any unspent amount remaining under the prior 2018 Stock Repurchase Program authorization. Repurchases may be made at management’s discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. We had approximately $270.2 million of repurchase authority remaining under the 2021 Stock Repurchase Program at March 31, 2023, based on trade date.
We repurchased the following shares under the 2021 Stock Repurchase Program:
Three Months Ended March 31,
(in millions, except share data)20232022
Repurchase Program SharesAggregate Purchase PriceSharesAggregate Purchase Price
2021 Stock Repurchase Program  $ 116,863 $25.0 
8. STOCK-BASED COMPENSATION PLANS
We have stock-based employee compensation plans with awards outstanding under the Churchill Downs Incorporated 2016 Omnibus Stock Incentive Plan (the "2016 Plan") and the Executive Long-Term Incentive Compensation Plan, which was adopted pursuant to the 2016 Plan. Our total stock-based compensation expense, which includes expenses related to restricted stock awards, restricted stock unit awards ("RSUs"), performance share unit awards ("PSUs"), and stock options associated with our employee stock purchase plan was $8.6 million for the three months ended March 31, 2023 and $7.0 million for the three months ended March 31, 2022.
During the three months ended March 31, 2023, the Company awarded RSUs to employees, RSUs and PSUs to certain named executive officers ("NEOs"), and RSUs to directors. The vesting criteria for the PSU awards granted in 2023 were based on a three-year service period with two performance conditions and a market condition related to relative total shareholder return ("TSR") consistent with prior year grants. The total compensation cost we will recognize under the PSUs is determined using the Monte Carlo valuation methodology, which factors in the value of the TSR market condition when determining the grant date fair value of the PSU. Compensation cost for each PSU is recognized during the performance and service period based on the probable achievement of the two performance criteria. The PSUs are converted into shares of our common stock at the time the PSU award value is finalized.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
12

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
A summary of the RSUs and PSUs granted during 2023 is presented below (units in thousands):
Grant YearAward Type
Number of Units Awarded(1)
Vesting Terms
2023RSU57
Vest equally over three service periods ending in 2026
2023PSU31
Three-year performance and service period ending in 2025
(1) PSUs reflect the target number of units for the original PSU grant.
9. DEBT
The following table presents our total debt outstanding:

(in millions)March 31, 2023December 31, 2022
Term Loan B due 2024$379.0 $380.0 
Term Loan B-1 due 2028294.0 294.7 
Term Loan A due 20271,283.8 800.0 
Revolver 664.1 
2027 Senior Notes600.0 600.0 
2028 Senior Notes700.0 700.0 
2030 Senior Notes1,200.0 1,200.0 
Total debt4,456.8 4,638.8 
Current maturities of long-term debt(72.0)(47.0)
  Unamortized premium and deferred finance charges(34.1)(33.1)
Total debt, net of current maturities and costs$4,350.7 $4,558.7 

Credit Agreement
At March 31, 2023, the Company’s senior secured credit facility (as amended from time to time, the “Credit Agreement") consisted of a $1.2 billion revolving credit facility (the "Revolver"), $400.0 million senior secured term loan B due 2024 (the "Term Loan B"), $300.0 million senior secured term loan B-1 due 2028 (the "Term Loan B-1"), $1.3 billion senior secured term loan A due 2027 (the "Term Loan A"), and $100.0 million swing line commitment. Certain amendments to the Credit Agreement entered into during 2022 and 2023, respectively, are described below.
On April 13, 2022, we amended the Credit Agreement to extend the maturity date of its Revolver to April 13, 2027, to increase the commitments under the existing revolving credit facility from $700.0 million to $1.2 billion, and to increase the swing line commitment from $50.0 million to $100.0 million. This amendment also provided for the senior secured Term Loan A due April 13, 2027 in the amount of $800.0 million, which was drawn on November 1, 2022 as part of the financing for the P2E Transaction. Refer to Note 3, Acquisitions for more information regarding the P2E Transaction. The Company capitalized $3.2 million of debt issuance costs associated with the Revolver commitment increase and $6.4 million of debt issuance costs associated with the Term Loan A which are being amortized as interest expense over the 5-year term.
On February 24, 2023, we amended our Credit Agreement to increase the loans under the existing Term Loan A due 2027 from $800.0 million to $1.3 billion and made certain other changes to the existing credit agreement. The Company used the net proceeds from the borrowings under the increased Term Loan A to repay outstanding loans under its Revolver, pay related transaction fees and expenses and for general corporate purposes. The Company capitalized $2.5 million of debt issuance costs associated with the increased Term Loan A which are being amortized as interest expense over the remainder of the 5-year term.
The Company is required to pay a commitment fee on the unused portion of the Revolver as determined by a pricing grid based on the consolidated total net secured leverage ratio of the Company. For the period ended March 31, 2023, the Company's commitment fee rate was 0.25%.
The Revolver and Term Loan A bear interest at SOFR plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio. As of March 31, 2023, that applicable margin was 150 basis points. The Term Loan B and Term Loan B-1 bear interest at LIBOR plus 200 basis points.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
13

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The phase-out of LIBOR in existing debt agreements is set for June 30, 2023. The Credit Agreement includes a general process for establishing an alternative reference rate to the extent LIBOR is phased out. The Company will complete the transition of its financing from LIBOR to SOFR by June 30, 2023. These transition activities will not have a material impact on the Company’s financial statements.
2027 Senior Notes
As of March 31, 2023, we had $600.0 million in aggregate principal amount of 5.500% senior unsecured notes that mature on April 1, 2027 (the "2027 Senior Notes"). The 2027 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1, 2019. The Company may redeem some or all of the 2027 Senior Notes at redemption prices set forth in the 2027 Indenture.
2028 Senior Notes
As of March 31, 2023, we had a total of $700.0 million in aggregate principal amount of 4.750% senior unsecured notes (collectively, the “2028 Senior Notes”) maturing on January 15, 2028. The 2028 Senior Notes consist of $500.0 million notes issued at par and $200.0 million notes issued at 103.25%. The 2028 Senior Notes were issued in a private offering to qualified institutional buyers, with interest payable in arrears on January 15th and July 15th of each year, commencing on July 15, 2018. The 3.25% premium is being amortized through interest expense, net over the term of the notes. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the 2028 Indenture.
2030 Senior Notes
As of March 31, 2023, we had $1.2 billion in aggregate principal amount of 5.750% senior unsecured notes that mature on April 13, 2030 (the "2030 Senior Notes"). The 2030 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1, 2022. In connection with the offering, we capitalized $18.3 million of debt issuance costs which are being amortized as interest expense over the term of the 2030 Senior Notes. The Company held the net proceeds of this transaction of $1.2 billion in escrow until the proceeds were utilized to complete the P2E Transaction on November 1, 2022. The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the 2030 Indenture.
10. REVENUE FROM CONTRACTS WITH CUSTOMERS
Performance Obligations
As of March 31, 2023, our Live and Historical Racing segment had remaining performance obligations on contracts with a duration greater than one year relating to television rights, sponsorships, personal seat licenses, and admissions, with an aggregate transaction price of $172.7 million. The revenue we expect to recognize on these remaining performance obligations is $50.2 million for the remainder of 2023, $47.5 million in 2024, $36.8 million in 2025, and the remainder thereafter.
As of March 31, 2023, our remaining performance obligations on contracts with a duration greater than one year in segments other than Live and Historical Racing were not material.
Contract Assets and Contract Liabilities
As of March 31, 2023 and December 31, 2022, contract assets were not material.
As of March 31, 2023 and December 31, 2022, contract liabilities were $140.7 million and $58.7 million, respectively, which are included in current deferred revenue, non-current deferred revenue, and accrued expense in the accompanying Condensed Consolidated Balance Sheets. Contract liabilities primarily relate to the Live and Historical Racing segment and the increase was primarily due to cash payments received for unfulfilled performance obligations. We recognized $3.6 million of revenue during the three months ended March 31, 2023, which was included in the contract liabilities balance at December 31, 2022. We recognized $3.2 million of revenue during the three months ended March 31, 2022, which was included in the contract liabilities balance at December 31, 2021.
Disaggregation of Revenue
The Company has included its disaggregated revenue disclosures as follows: 
For the Live and Historical Racing segment, revenue is disaggregated between Churchill Downs Racetrack and historical racing properties given that our racing facilities revenues primarily revolve around live racing events while our historical racing properties revenues primarily revolve around historical racing. This segment is also disaggregated by location given the geographic economic factors that affect the revenue of service offerings. Within the Live and
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
14

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Historical racing segment, revenue is further disaggregated between live and simulcast racing, historical racing, racing event-related services, and other services.
For the TwinSpires segment, revenue is disaggregated between live and simulcast racing, gaming, and other services.
For the Gaming segment, revenue is disaggregated by location given the geographic economic factors that affect the revenue of gaming service offerings. Within the Gaming segment, revenue is further disaggregated between live and simulcast racing, racing event-related services, gaming, and other services.
We believe that these disclosures depict how the amount, nature, timing, and uncertainty of cash flows are affected by economic factors. The tables below present net revenue from external customers and intercompany revenue from each of our segments:
 Three Months Ended March 31,
(in millions)20232022
Net revenue from external customers:
Live and Historical Racing:
Churchill Downs Racetrack$2.4 $2.0 
Louisville44.0 42.8 
Northern Kentucky26.3 10.8 
Southwestern Kentucky36.5 30.4 
Western Kentucky4.8  
Virginia97.7  
New Hampshire2.7  
Total Live and Historical Racing$214.4 $86.0 
TwinSpires:$94.8 $100.3 
Gaming:
Florida$26.1 $27.0 
Iowa24.5  
Louisiana44.1 41.5 
Maine27.7 26.8 
Maryland23.3 21.3 
Mississippi27.5 27.5 
New York44.5  
Pennsylvania32.3 33.2 
Total Gaming$250.0 $177.3 
All Other0.3 0.5 
Net revenue from external customers$559.5 $364.1 
Intercompany net revenues:
Live and Historical Racing$1.4 $1.2 
TwinSpires1.6 1.1 
Gaming1.5 1.9 
All Other0.2  
Eliminations(4.7)(4.2)
Intercompany net revenue$ $ 

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
15

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Three Months Ended March 31, 2023
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$11.0 $79.4 $11.6 $102.0 $ $102.0 
Historical racing(a)
185.3  6.0 191.3  191.3 
Racing event-related services1.0  1.9 2.9  2.9 
Gaming(a)
2.6 4.4 205.5 212.5  212.5 
Other(a)
14.5 11.0 25.0 50.5 0.3 50.8 
Total$214.4 $94.8 $250.0 $559.2 $0.3 $559.5 

Three Months Ended March 31, 2022
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$5.6 $81.5 $12.9 $100.0 $ $100.0 
Historical racing(a)
73.6   73.6  73.6 
Racing event-related services0.5  0.4 0.9  0.9 
Gaming(a)
 10.3 150.9 161.2  161.2 
Other(a)
6.3 8.5 13.1 27.9 0.5 28.4 
Total$86.0 $100.3 $177.3 $363.6 $0.5 $364.1 
(a)Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in Other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $12.1 million for the three months ended March 31, 2023 and $7.0 million for the three months ended March 31, 2022.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
16

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
11. OTHER BALANCE SHEET ITEMS
Accounts receivable, net
Accounts receivable is comprised of the following:
(in millions)March 31, 2023December 31, 2022
Trade receivables$13.2 $12.5 
Simulcast and online wagering receivables45.0 54.1 
Other receivables20.7 20.6 
78.9 87.2 
Allowance for doubtful accounts(4.9)(5.7)
Total$74.0 $81.5 
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following:
(in millions)March 31, 2023December 31, 2022
Account wagering deposits liability$50.7 $57.8 
Accrued salaries and related benefits18.8 39.6 
Purses payable41.3 46.1 
Accrued interest58.3 47.8 
Accrued fixed assets43.6 39.5 
Accrued gaming liabilities26.5 26.3 
Other109.0 103.9 
Total$348.2 $361.0 
12. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates as of March 31, 2023 and December 31, 2022 primarily consisted of a 61.3% interest in Rivers Casino Des Plaines ("Rivers Des Plaines"), a 50% interest in Miami Valley Gaming and Racing ("MVG"), and other immaterial joint ventures.
Rivers Des Plaines
The ownership of Rivers Des Plaines is comprised of the following: (1) the Company owns 61.3%, (2) High Plaines Gaming, LLC ("High Plaines"), an affiliate of Rush Street Gaming, LLC, owns 36.0%, and (3) Casino Investors, LLC owns 2.7%. Both the Company and High Plaines have participating rights over Rivers Des Plaines, and both must consent to operating, investing and financing decisions. As a result, we account for Rivers Des Plaines using the equity method. As of March 31, 2023, the net aggregate basis difference between the Company’s investment in Rivers Des Plaines and the amounts of the underlying equity in net assets was $832.4 million.
Our investment in Rivers Des Plaines was $537.9 million and $544.9 million as of March 31, 2023 and December 31, 2022, respectively. The Company received distributions from Rivers Des Plaines of $33.8 million and $30.5 million for the three months ended March 31, 2023 and 2022, respectively.
Miami Valley Gaming
Delaware North Companies Gaming & Entertainment Inc. ("DNC") owns the remaining 50% interest in MVG. Since both the Company and DNC have participating rights over MVG, and both must consent to MVG's operating, investing and financing decisions, we account for MVG using the equity method.
Our investment in MVG was $113.9 million and $114.4 million as of March 31, 2023 and December 31, 2022, respectively. The Company received distributions from MVG of $12.0 million and $10.0 million for the three months ended March 31, 2023 and 2022, respectively.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2023
17

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Summarized Financial Results for our Unconsolidated Affiliates
Summarized below are the financial results for our unconsolidated affiliates.
Three Months Ended March 31,
(in millions)20232022
Net revenue$220.6 $177.2 
Operating and SG&A expense137.2 118.2 
Depreciation and amortization5.7 5.3 
Total operating expense142.9 123.5 
Operating income77.7 53.7 
Interest and other, net(10.9)4.1 
Net income$66.8 $57.8 
(in millions)March 31, 2023December 31, 2022
Assets
Current assets$103.2 $91.0 
Property and equipment, net343.9 345.7 
Other assets, net264.4 265.0 
Total assets$711.5 $701.7 
Liabilities and Members' Deficit
Current liabilities$121.8 $97.9 
Long-term debt838.0 838.6 
Other liabilities0.2 0.2 
Members' deficit(248.5)(235.0)
Total liabilities and members' deficit$