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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, 2024
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 Global Select 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 17, 2024 was 73,504,938 shares.



CHURCHILL DOWNS INCORPORATED
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the Quarter Ended March 31, 2024
 
Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
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)20242023
Net revenue:
Live and Historical Racing$245.1 $214.4 
TwinSpires106.6 94.8 
Gaming239.2 250.0 
All Other 0.3 
Total net revenue590.9 559.5 
Operating expense:
Live and Historical Racing157.2 143.3 
TwinSpires67.9 65.7 
Gaming178.5 173.5 
All Other2.1 5.0 
Selling, general and administrative expense54.8 52.3 
Transaction expense, net4.1 (0.2)
Total operating expense464.6 439.6 
Operating income126.3 119.9 
Other (expense) income:
Interest expense, net(70.4)(64.7)
Equity in income of unconsolidated affiliates37.8 38.3 
Gain on sale of Arlington 114.0 
Miscellaneous, net8.1 1.4 
Total other (expense) income(24.5)89.0 
Income from operations before provision for income taxes101.8 208.9 
Income tax provision(21.4)(53.2)
Net income$80.4 $155.7 
Net income per common share data:
Basic net income$1.09 $2.07 
Diluted net income$1.08 $2.05 
Weighted average shares outstanding:
Basic74.1 75.3 
Diluted74.7 76.1 
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
3


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions)March 31, 2024December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$149.4 $144.5 
Restricted cash
72.6 77.3 
Accounts receivable, net
115.0 106.9 
Income taxes receivable
 12.6 
Other current assets
79.0 59.5 
Total current assets416.0 400.8 
Property and equipment, net
2,668.5 2,561.2 
Investment in and advances to unconsolidated affiliates
647.8 655.9 
Goodwill
900.2 899.9 
Other intangible assets, net
2,415.0 2,418.4 
Other assets
19.3 19.3 
Total assets$7,066.8 $6,955.5 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$187.8 $158.5 
Accrued expenses and other current liabilities423.3 426.8 
Income taxes payable4.1  
Current deferred revenue
153.3 73.2 
Current maturities of long-term debt
68.0 68.0 
Dividends payable
0.7 29.3 
Total current liabilities837.2 755.8 
Long-term debt, net of current maturities and loan origination fees
1,786.5 1,697.1 
Notes payable, net of debt issuance costs
3,072.4 3,071.2 
Non-current deferred revenue11.8 11.8 
Deferred income taxes
393.1 388.2 
Other liabilities
138.9 137.8 
Total liabilities6,239.9 6,061.9 
Commitments and contingencies
Shareholders' equity:
Preferred stock  
Common stock  
Retained earnings
827.8 894.5 
Accumulated other comprehensive loss
(0.9)(0.9)
Total shareholders' equity826.9 893.6 
Total liabilities and shareholders' equity$7,066.8 $6,955.5 
    
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
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, 202374.5$ $894.5 $(0.9)$893.6 
Net income80.4 80.4 
Issuance of common stock0.3 — 
Repurchase of common stock(1.2)(7.2)(138.5)(145.7)
Taxes paid related to net share settlement of stock awards(0.1)(7.6)(7.6)
Stock-based compensation7.2 7.2 
Other(1.0)(1.0)
Balance, March 31, 202473.5$ $827.8 $(0.9)$826.9 
Common StockRetained
Earnings
Accumulated Other Comprehensive LossTotal Shareholders' Equity
(in millions)SharesAmount
Balance, December 31, 202274.8 $ $552.4 $(0.9)$551.5 
Net income155.7 155.7 
Issuance of common stock0.2 — 
Taxes paid related to net share settlement of stock awards(0.1)(8.6)(2.7)(11.3)
Stock-based compensation8.6 8.6 
Other(0.3)(0.3)
Balance, March 31, 202374.9$ $705.1 $(0.9)$704.2 
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
5


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
(in millions)20242023
Cash flows from operating activities:
Net income $80.4 $155.7 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization46.9 37.9 
Distributions from unconsolidated affiliates45.0 45.8 
Equity in income of unconsolidated affiliates(37.8)(38.3)
Stock-based compensation7.2 8.6 
Deferred income taxes4.9 33.2 
Amortization of operating lease assets1.4 2.2 
Gain on sale of Arlington (114.0)
Other1.7 0.8 
Changes in operating assets and liabilities:
Income taxes17.0 19.9 
Deferred revenue80.1 81.8 
Other assets and liabilities7.9 (17.7)
Net cash provided by operating activities254.7 215.9 
Cash flows from investing activities:
Capital maintenance expenditures(12.4)(11.8)
Capital project expenditures(142.6)(122.9)
Proceeds from sale of Arlington 195.7 
Other1.6 (6.5)
Net cash (used in) provided by investing activities(153.4)54.5 
Cash flows from financing activities:
Proceeds from borrowings under long-term debt obligations355.5 615.5 
Repayments of borrowings under long-term debt obligations(266.7)(797.5)
Payment of dividends(28.6)(26.7)
Repurchase of common stock(141.7)(0.5)
Taxes paid related to net share settlement of stock awards (10.4)(11.3)
Debt issuance costs (2.5)
Change in bank overdraft(8.6)(14.2)
Other(0.6)(0.5)
Net cash used in financing activities(101.1)(237.7)
Net increase in cash, cash equivalents and restricted cash0.2 32.7 
Cash, cash equivalents and restricted cash, beginning of period221.8 204.7 
Cash, cash equivalents and restricted cash, end of period$222.0 $237.4 
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
6


CHURCHILL DOWNS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Three Months Ended March 31,
(in millions)20242023
Supplemental disclosures of cash flow information:
Cash paid for interest$50.8 $55.5 
Cash paid for income taxes 0.2 0.8 
Cash received from income tax refunds0.1 0.7 
Schedule of non-cash operating, investing and financing activities:
Property and equipment additions included in accounts payable and accrued expenses$83.9 $54.2 
Right-of-use assets obtained in exchange for lease obligations in operating leases 0.1 0.5 
Right-of-use assets obtained in exchange for lease obligations in finance leases3.6 23.6 
Repurchase of common stock included in accrued expense and other current liabilities4.0  
The accompanying notes are an integral part of the condensed consolidated financial statements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
7

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

1. DESCRIPTION OF BUSINESS
Basis of Presentation
Churchill Downs Incorporated (the "Company" or "CDI") 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, 2023 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, 2023.
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.
2. RECENT ACCOUNTING PRONOUNCEMENTS
Recent Accounting Pronouncements - effective in 2024 or thereafter
In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s ("SEC") Disclosure Update and Simplification Initiative, to amend certain disclosure and presentation requirements for a variety of topics within FASB's Accounting Standards Codification ("ASC"). These amendments align the requirements in the ASC regarding the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements. The amendments are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted, including adoption in any interim periods for which financial statements have not been issued. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. The amendments are expected to be applied prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures.
3. ACQUISITIONS
Exacta Systems
On August 22, 2023, the Company completed its acquisition of Exacta Systems, LLC ("Exacta") for a purchase consideration of $248.2 million, net of cash acquired, which consisted of a $241.3 million cash payment and $6.9 million of deferred payments, which are payable over two years from acquisition (the "Exacta Transaction"). As of March 31, 2024, there were $4.9 million deferred payments remaining. Exacta is a leading provider of central determinate system technology in Historical Racing Machines ("HRMs") across the country. The Exacta Transaction is enabling the Company to realize significant synergies related to the Company’s HRM operations. Exacta operates within the Company’s TwinSpires segment and will continue to service its growing portfolio of third-party HRM operators in Kentucky, Wyoming, and New Hampshire.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
8

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Goodwill of $177.4 million related to the Exacta Transaction was recognized, of which $96.0 million was allocated to the Live and Historical Racing segment and $81.4 million was allocated to the TwinSpires segment. The goodwill related to the Exacta Transaction is deductible for tax purposes.
4. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill, by segment, is composed of the following:
(in millions)Live and HistoricalTwinSpiresGamingAll OtherTotal
Balances as of December 31, 2023$376.2 $233.4 $290.3 $ $899.9 
Adjustments0.1 0.2   0.3 
Balances as of March 31, 2024$376.3 $233.6 $290.3 $ $900.2 
Other intangible assets are comprised of the following:
March 31, 2024December 31, 2023
(in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Definite-lived intangible assets$96.0 $(28.3)$67.7 $97.5 $(26.4)$71.1 
Indefinite-lived intangible assets2,347.3 2,347.3 
Total$2,415.0 $2,418.4 
In the second quarter of 2023, the Company recognized a $24.5 million non-cash impairment charge for the Presque Isle Downs and Casino ("Presque Isle") gaming rights and trademark. The Company continues to monitor the current economic conditions and the impacts on the results of operations of Presque Isle. Future economic conditions could have a negative impact on the estimates and assumptions utilized in our asset impairment assessments. These potential impacts could increase the risk of a future impairment of assets at Presque Isle.
5. INCOME TAXES
The Company’s effective income tax rate for the three months ended March 31, 2024 was equal to the U.S. federal statutory rate of 21.0%. The Company's income tax rate for the three months ended March 31, 2024 includes an unfavorable impact from state income taxes and non-deductible officer’s compensation, that was offset by a $5.6 million benefit from the remeasurement of deferred income tax liabilities as a result of certain entity classification elections that were made in the first quarter of 2024 decreasing income attributable to states with higher tax rates compared to prior year.
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.
6. SHAREHOLDERS' EQUITY
Stock Repurchase Programs
On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $500.0 million (the "2021 Stock Repurchase Program"). The 2021 Stock Repurchase Program includes and is not in addition to any unspent amount remaining under the prior 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 $192.9 million of repurchase authority remaining under the 2021 Stock Repurchase Program at March 31, 2024, based on trade date.




FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
9

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
We repurchased the following shares under the 2021 Stock Repurchase Program:
Three Months Ended March 31,
(in millions, except share data)20242023
Repurchase Program SharesAggregate Purchase PriceSharesAggregate Purchase Price
2021 Stock Repurchase Program 184,821 $22.0  $ 
On January 2, 2024, the Company closed on an agreement, dated December 18, 2023, with an affiliate of The Duchossois Group ("TDG") to repurchase 1,000,000 shares of the Company’s common stock, for $123.75 per share in a privately negotiated transaction for an aggregate purchase price of $123.8 million. This represented a discount of 4.03% to the closing price on December 15, 2023 of $128.95. The repurchase of shares of common stock from TDG was approved by the Company's Board of Directors separately from and did not reduce the authorized amount remaining under any existing common stock repurchase programs. The repurchase of the shares was funded using available cash and borrowings under the Company’s senior secured credit facility.
Two for One Stock Split
Effective May 22, 2023, the Company's common stock was split two-for-one with a proportionate increase in the number of its authorized shares of common stock. All share and per-share amounts in the Company’s condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the effects of the stock split.
7. 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 $7.2 million for the three months ended March 31, 2024 and $8.6 million for the three months ended March 31, 2023.
During the three months ended March 31, 2024, 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 2024 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.
A summary of the RSUs and PSUs granted during 2024 is presented below (units in thousands):
Grant YearAward Type
Number of Units Awarded(1)
Vesting Terms
2024RSU132
Vest equally over three service periods ending in 2026
2024PSU63
Three-year performance and service period ending in 2026
(1) PSUs reflect the target number of units for the original PSU grant.





FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
10

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
8. DEBT
The following table presents our total debt outstanding:
(in millions)March 31, 2024December 31, 2023
Term Loan B-1 due 2028$291.0 $291.8 
Term Loan A due 20271,218.7 1,235.0 
Revolver353.0 247.2 
2027 Senior Notes600.0 600.0 
2028 Senior Notes700.0 700.0 
2030 Senior Notes1,200.0 1,200.0 
2031 Senior Notes600.0 600.0 
Total debt4,962.7 4,874.0 
Current maturities of long-term debt(68.0)(68.0)
  Unamortized premium and deferred finance charges(35.8)(37.7)
Total debt, net of current maturities and costs$4,858.9 $4,768.3 

Credit Agreement
At March 31, 2024, the Company’s senior secured credit facility (as amended from time to time, the “Credit Agreement") consisted of a $1.2 billion revolving credit facility (the "Revolver"), $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.
Term Loan B-1 bears interest at the Secured Overnight Financing Rate ("SOFR") plus 210 basis points and requires quarterly payments of 0.25% of the original $300.0 million balance. The Term Loan B-1 may be subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the Credit Agreement.
The Revolver and Term Loan A bear interest at SOFR plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio. As of March 31, 2024, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company had $841.9 million available borrowing capacity, after consideration of $5.1 million in outstanding letters of credit, under the Revolver as of March 31, 2024.
The Company is required to pay a commitment fee on the unused portion of the Revolver as determined by a pricing grid based on the consolidated total net secured leverage ratio of the Company. For the period ended March 31, 2024, the Company's commitment fee rate was 0.25%.
2027 Senior Notes
As of March 31, 2024, 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 1st, 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, 2024, we had a total of $700.0 million in aggregate principal amount of 4.750% senior unsecured notes (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 15th, 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, 2024, 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
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
11

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2022. The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the 2030 Indenture.
2031 Senior Notes
As of March 31, 2024, we had $600.0 million in aggregate principal amount of 6.750% senior unsecured notes that mature on April 25, 2031 (the "2031 Senior Notes"). The 2031 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on May 1st and November 1st of each year, commencing on November 1st, 2023. The Company may redeem some or all of the 2031 Notes at any time prior to April 25, 2025, at redemption prices set forth in the 2031 Offering Memorandum.
9. REVENUE FROM CONTRACTS WITH CUSTOMERS
Performance Obligations
As of March 31, 2024, 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 $157.6 million. The revenue we expect to recognize on these remaining performance obligations is $61.2 million for the remainder of 2024, $47.4 million in 2025, $23.3 million in 2026, and the remainder thereafter.
As of March 31, 2024, 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, 2024 and December 31, 2023, contract assets were not material.
As of March 31, 2024 and December 31, 2023, contract liabilities were $172.3 million and $92.3 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 deferred revenue related to the 150th Kentucky Derby. We recognized $5.8 million of revenue during the three months ended March 31, 2024, which was included in the contract liabilities balance at December 31, 2023. 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.
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 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:
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
12

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 Three Months Ended March 31,
(in millions)20242023
Net revenue from external customers:
Live and Historical Racing:
Churchill Downs Racetrack$3.1 $2.4 
Louisville53.7 44.0 
Northern Kentucky28.5 26.3 
Southwestern Kentucky38.6 36.5 
Western Kentucky6.8 4.8 
Virginia111.2 97.7 
New Hampshire3.2 2.7 
Total Live and Historical Racing$245.1 $214.4 
TwinSpires:$106.6 $94.8 
Gaming:
Florida$26.1 $26.1 
Iowa23.4 24.5 
Louisiana44.3 44.1 
Maine26.8 27.7 
Maryland21.6 23.3 
Mississippi26.0 27.5 
New York45.0 44.5 
Pennsylvania26.0 32.3 
Total Gaming239.2 250.0 
All Other 0.3 
Net revenue from external customers$590.9 $559.5 
Intercompany net revenues:
Live and Historical Racing$3.8 $1.4 
TwinSpires7.5 1.6 
Gaming4.0 1.5 
All Other 0.2 
Eliminations(15.3)(4.7)
Intercompany net revenue$ $ 

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
13

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Three Months Ended March 31, 2024
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$11.0 $79.8 $10.6 $101.4 $ $101.4 
Historical racing(a)
212.1  8.8 220.9  220.9 
Racing event-related services1.1  2.2 3.3  3.3 
Gaming(a)
3.1 5.7 193.1 201.9  201.9 
Other(a)
17.8 21.1 24.5 63.4  63.4 
Total$245.1 $106.6 $239.2 $590.9 $ $590.9 

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 
(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 $13.4 million for the three months ended March 31, 2024 and $12.1 million for the three months ended March 31, 2023.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
14

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
10. OTHER BALANCE SHEET ITEMS
Accounts receivable, net
Accounts receivable is comprised of the following:
(in millions)March 31, 2024December 31, 2023
Trade receivables$35.2 $42.6 
Simulcast and online wagering receivables49.4 44.9 
Other receivables35.7 24.4 
120.3 111.9 
Allowance for credit losses(5.3)(5.0)
    Total$115.0 $106.9 
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following:
(in millions)March 31, 2024December 31, 2023
Account wagering deposits liability$53.3 $58.7 
Accrued salaries and related benefits28.2 45.1 
Purses payable38.2 35.2 
Accrued interest76.6 49.4 
Accrued fixed assets69.5 88.6 
Accrued gaming liabilities27.3 29.5 
Other130.2 120.3 
Total$423.3 $426.8 
11. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates as of March 31, 2024 and December 31, 2023 primarily consisted of interests in Rivers Casino Des Plaines ("Rivers Des Plaines") and Miami Valley Gaming and Racing ("MVG").
Rivers Casino 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 certain operating, investing and financing decisions. As a result, we account for Rivers Des Plaines using the equity method. As of March 31, 2024, 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 $832.7 million.
Our investment in Rivers Des Plaines was $532.6 million and $541.2 million as of March 31, 2024 and December 31, 2023, respectively. The Company received distributions from Rivers Des Plaines of $34.5 million and $33.8 million for the three months ended March 31, 2024 and 2023, respectively.
Miami Valley Gaming and Racing
The Company owns a 50% interest in MVG and 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 certain operating, investing and financing decisions, we account for MVG using the equity method.
Our investment in MVG was $115.2 million and $114.6 million as of March 31, 2024 and December 31, 2023, respectively. The Company received distributions from MVG of $10.5 million and $12.0 million for the three months ended March 31, 2024 and 2023, respectively.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
15

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)20242023
Net revenue$216.9 $220.6 
Operating and SG&A expense134.9 137.2 
Depreciation and amortization6.3 5.7 
Total operating expense141.2 142.9 
Operating income75.7 77.7 
Interest and other, net(11.0)(10.9)
Net income$64.7 $66.8 
(in millions)March 31, 2024December 31, 2023
Assets
Current assets$99.2 $104.8 
Property and equipment, net336.4 339.4 
Other assets, net270.1 266.1 
Total assets$705.7 $710.3 
Liabilities and Members' Deficit
Current liabilities$116.4 $106.2 
Long-term debt845.6 847.2 
Other liabilities0.8 0.7 
Members' deficit(257.1)(243.8)
Total liabilities and members' deficit$705.7 $710.3 
12. FAIR VALUE OF ASSETS AND LIABILITIES
We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate.
Restricted Cash
Our restricted cash accounts held in money market and interest-bearing accounts qualify for Level 1 in the fair value hierarchy, which includes unadjusted quoted market prices in active markets for identical assets.
Debt
The fair value of the Company’s 2031 Senior Notes, 2030 Senior Notes, 2028 Senior Notes, and 2027 Senior Notes are estimated based on unadjusted quoted prices for identical or similar liabilities in markets that are not active and as such are Level 2 measurements. The fair values of the Company's Term Loan B-1, Term Loan A, and Revolver under the Credit Agreement approximate the gross carrying value of the variable rate debt and as such are Level 2 measurements.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
16

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The carrying amounts and estimated fair values by input level of the Company's financial instruments are as follows:
March 31, 2024
(in millions)Carrying AmountFair ValueLevel 1Level 2Level 3
Financial assets:
Restricted cash$72.6 $72.6 $72.6 $ $ 
Financial liabilities:
Term Loan B-1288.6 291.0  291.0  
Term Loan A1,212.9 1,218.7  1,218.7  
Revolver353.0 353.0  353.0  
2027 Senior Notes596.7 586.5  586.5  
2028 Senior Notes698.8 663.3  663.3  
2030 Senior Notes1,186.2 1,158.0  1,158.0  
2031 Senior Notes590.7 602.2 602.2 
December 31, 2023
(in millions)Carrying AmountFair ValueLevel 1Level 2Level 3
Financial assets:
Restricted cash$77.3 $77.3 $77.3 $ $ 
Financial liabilities:
Term Loan B-1289.2 291.8  291.8  
Term Loan A1,228.7 1,235.0  1,235.0  
Revolver247.2 247.2  247.2  
2027 Senior Notes596.5 591.8  591.8  
2028 Senior Notes698.7 668.6  668.6  
2030 Senior Notes1,185.6 1,171.5  1,171.5  
2031 Senior Notes590.4611.2 611.2 
13. CONTINGENCIES
We are involved in litigation arising in the ordinary course of conducting business. We carry insurance for workers' compensation claims from our employees and general liability for claims from independent contractors, customers, and guests. We are self-insured up to an aggregate stop loss for our general liability and workers' compensation coverages.
We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in the early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our consolidated financial condition, results of operations, or cash flows. Legal fees are expensed as incurred.
If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. In the event that a legal proceeding results in a substantial judgment against us, or settlement by us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse impact on our business.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
17

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
14. NET INCOME PER COMMON SHARE COMPUTATIONS
The following is a reconciliation of the numerator and denominator of the net income per common share computations:
Three Months Ended March 31,
(in millions, except per share data) 20242023
Numerator for basic and diluted net income per common share:
Net income$80.4 $155.7 
Denominator for net income per common share:
Basic74.1 75.3 
Plus dilutive effect of stock awards0.6 0.8 
Diluted74.7 76.1 
Net income per common share data:
Basic net income$1.09 $2.07 
Diluted net income$1.08 $2.05 
15. SEGMENT INFORMATION
We manage our operations through three reportable segments: Live and Historical Racing, TwinSpires, and Gaming. Our operating segments reflect the internal management reporting used by our chief operating decision maker to evaluate results of operations and to assess performance and allocate resources.
On September 7, 2023, the Company began operating retail sports betting at its racetracks and HRM facilities in Kentucky. In addition to retail sports betting, third-party service providers began operating online sports wagering in partnership with the Company’s racetracks on September 28, 2023. Our retail and online sports betting business is included in the TwinSpires segment.
Eliminations include the elimination of intersegment transactions. We utilize non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. Adjusted EBITDA includes the following adjustments:
Adjusted EBITDA includes our portion of EBITDA from our equity investments.
Adjusted EBITDA excludes:
Transaction expense, net which includes:
Acquisition, disposition, and property sale related charges;
Other transaction expense, including legal, accounting, and other deal-related expense;
Stock-based compensation expense;
Asset impairments;
Gain on property sales;
Legal reserves;
Pre-opening expense; and
Other charges, recoveries, and expenses
As of December 31, 2021, our property in Arlington Heights, Illinois ("Arlington") ceased racing and simulcast operations and the property was sold on February 15, 2023 to the Chicago Bears. Arlington's results and exit costs in 2023 are treated as an adjustment to EBITDA and are included in other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
18

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
On June 26, 2023, the Company's management agreement for Lady Luck Casino Nemacolin ("Lady Luck") in Farmington, Pennsylvania expired and was not renewed. The Company completed the sale of substantially all its assets at Lady Luck for an immaterial amount.
We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the accompanying Condensed Consolidated Statements of Comprehensive Income.
The tables below present net revenue from external customers, Adjusted EBITDA by segment and reconciles comprehensive income to Adjusted EBITDA:
Net revenue by segment is comprised of the following:
Three Months Ended March 31,
(in millions)20242023
Live and Historical Racing$245.1 $214.4 
TwinSpires106.6 94.8 
Gaming239.2 250.0 
All Other 0.3 
Net Revenue$590.9 $559.5 





FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
19

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Adjusted EBITDA by segment is comprised of the following:
Three Months Ended March 31, 2024
(in millions)Live and Historical RacingTwinSpiresGaming
Revenues$248.9 $114.1 $243.2 
Gaming taxes and purses(65.0)(4.9)(80.5)
Marketing and advertising(9.3)(1.2)(7.8)
Salaries and benefits(26.8)(7.9)(38.0)
Content expense(1.3)(44.0)(1.8)
Selling, general and administrative expense(8.8)(4.5)(10.2)
Maintenance, insurance and utilities(10.3)(1.0)(9.6)
Property and other taxes(2.7)(0.1)(3.4)
Other operating expense(23.9)(10.9)(18.3)
Other income   49.2 
Adjusted EBITDA$100.8 $39.6 $122.8 
Three Months Ended March 31, 2023
(in millions)Live and Historical RacingTwinSpiresGaming
Revenues$215.8 $96.3 $251.6 
Gaming taxes and purses(56.5)(5.0)(83.6)
Marketing and advertising(8.2)(1.4)(8.6)
Salaries and benefits(21.8)(6.2)(34.5)
Content expense(1.5)(43.0)(1.8)
Selling, general and administrative expense(8.7)(2.3)(12.2)
Maintenance, insurance and utilities(9.3)(0.9)(9.8)
Property and other taxes(1.2) (3.3)
Other operating expense(26.5)(9.1)(16.9)
Other income  1.0 48.6 
Adjusted EBITDA$82.1 $29.4 $129.5 

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
20

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

Adjusted EBITDA by segment is comprised of the following:
Three Months Ended March 31,
(in millions)20242023
Reconciliation of Comprehensive Income to Adjusted EBITDA:
Net income and comprehensive income $80.4 $155.7 
Additions:
Depreciation and amortization46.9 37.9 
Interest expense70.4 64.7 
Income tax provision 21.4 53.2 
EBITDA$219.1 $311.5 
Adjustments to EBITDA:
Stock-based compensation expense $7.2 $8.6 
Pre-opening expense8.3 3.2 
Other expenses, net0.2 3.7 
Transaction expense, net4.1 (0.2)
Other income, expense:
Interest, depreciation and amortization expense related to equity investments10.3 9.8 
Other charges and recoveries, net(6.7)0.3 
Gain on sale of Arlington (114.0)
Total adjustments to EBITDA23.4 (88.6)
Adjusted EBITDA$242.5 $222.9 
Adjusted EBITDA by segment:
Live and Historical Racing$100.8 $82.1 
TwinSpires39.6 29.4 
Gaming122.8 129.5 
Total segment Adjusted EBITDA263.2 241.0 
All Other(20.7)(18.1)
Total Adjusted EBITDA$242.5 $222.9 

The table below presents total asset information for each of our segments:
(in millions) March 31, 2024December 31, 2023
Total assets:
Live and Historical Racing$3,936.9 $3,872.9 
TwinSpires465.1 473.9 
Gaming1,956.5 1,920.9 
Total segment assets6,358.5 6,267.7 
All Other708.3 687.8 
Total assets$7,066.8 $6,955.5 
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
21

Churchill Downs Incorporated
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The table below presents total capital expenditures for each of our segments:
Three Months Ended March 31,
(in millions)20242023
Capital expenditures:
Live and Historical Racing$84.8 $108.4 
TwinSpires3.8 3.0 
Gaming61.3 20.7 
Total segment capital expenditures149.9 132.1 
All Other5.1 2.6 
Total capital expenditures$155.0 $134.7 
16. SUBSEQUENT EVENTS
On April 8, 2024, the Company closed on the sale of 49% of the United Tote Company (“United Tote”), a wholly-owned subsidiary of CDI, to NYRA Content Management Solutions, LLC, a subsidiary of the New York Racing Association, Inc.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
22


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains various "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"), which provides certain "safe harbor" provisions for forward-looking statements. All forward-looking statements made in this report are made pursuant to the Act. The reader is cautioned that such forward-looking statements are based on information available at the time and / or management’s good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Forward-looking statements speak only as of the date that the statement was made. We assume no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. Forward-looking statements are typically identified by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “seek,” “should,” “will,” “scheduled”, and similar words or similar expressions (or negative versions of such words or expressions), although some forward-looking statements are expressed differently.
Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ materially from expectations include the following:
the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather, including as a result of climate change;
the effect of economic conditions on our consumers' confidence and discretionary spending or our access to credit, including the impact of inflation;
additional or increased taxes and fees;
the impact of any pandemics, epidemics, or outbreaks of infectious diseases, including possible new variants of COVID-19, and related economic matters on our results of operations, financial conditions, and prospects;
lack of confidence in the integrity of our core businesses or any deterioration in our reputation;
loss of key or highly skilled personnel, as well as general disruptions in the general labor market;
the impact of significant competition, and the expectation that competition levels will increase;
changes in consumer preferences, attendance, wagering, and sponsorships;
risks associated with equity investments, strategic alliances, and other third-party agreements;
inability to respond to rapid technological changes in a timely manner;
concentration and evolution of slot machine and historical racing machine ("HRM") manufacturing and other technology conditions that could impose additional costs;
failure to enter into or maintain agreements with industry constituents, including horsemen and other racetracks:
inability to successfully focus on market access and retail operations for our TwinSpires sports betting business and effectively compete;
online security risk, including cyber-security breaches, or loss or misuse of our stored information as a result of a breach including customers’ personal information could lead to government enforcement actions or other litigation;
reliance on our technology services and catastrophic events and system failures disrupting our operations;
inability to identify, complete, or fully realize the benefits of, our proposed acquisitions, divestitures, development of new venues or the expansion of existing facilities on time, on budget, or as planned;
difficulty in integrating recent or future acquisitions into our operations;
cost overruns and other uncertainties associated with the development of new venues and the expansion of existing facilities;
general risks related to real estate ownership and significant expenditures, including risks related to environmental liabilities;
personal injury litigation related to injuries occurring at our racetracks;
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
23


compliance with the Foreign Corrupt Practices Act or other similar laws and regulations, or applicable anti-money laundering regulations;
payment-related risks, such as risk associated with fraudulent credit card or debit card use;
work stoppages and labor problems;
risks related to pending or future legal proceedings and other actions;
highly regulated operations and changes in the regulatory environment could adversely affect our business;
restrictions in our debt facilities limiting our flexibility to operate our business;
failure to comply with the financial ratios and other covenants in our debt facilities and other indebtedness;
increases to interest rates (due to inflation or otherwise);
disruption in the credit markets or changes to our credit ratings may adversely affect our business;
increase in our insurance costs, or inability to obtain similar insurance coverage in the future, and any inability to recover under our insurance policies for damages sustained at our properties in the event of inclement weather and casualty events; and
other factors described under the heading “Risk Factors” in our most recent Annual Report on Form 10-K and in other filings we make with the Securities and Exchange Commission.
We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
The following information is unaudited. Tabular dollars are in millions, except per share amounts. 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, 2023, including Part I - Item 1A, "Risk Factors" of our Form 10-K for a discussion regarding some of the reasons that actual results may be materially different from those we anticipate.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
24


Our Business
Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby. Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties.
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.
Key Indicators to Evaluate Business Results and Financial Condition
Our management monitors a variety of key indicators to evaluate our business results and financial condition. These indicators include changes in net revenue, operating expense, operating income, earnings per share, outstanding debt balance, operating cash flow, and capital spend.
Our consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). We also use non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. We believe that the use of Adjusted EBITDA as a key performance measure of results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income (as determined in accordance with GAAP) as a measure of our operating results.
Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for the following:
Adjusted EBITDA includes our portion of EBITDA from our equity investments.
Adjusted EBITDA excludes:
Transaction expense, net which includes:
Acquisition, disposition, and property sale related charges;
Other transaction expense, including legal, accounting and other deal-related expense;
Stock-based compensation expense;
Asset impairments;
Gain on property sales;
Legal reserves;
Pre-opening expense; and
Other charges, recoveries and expenses
As of December 31, 2021, our property in Arlington Heights, Illinois ("Arlington") ceased racing and simulcast operations and the property was sold on February 15, 2023 to the Chicago Bears. Arlington's results and exit costs in 2023 are treated as an adjustment to EBITDA and are included in other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.
On June 26, 2023, the Company's management agreement for Lady Luck Casino Nemacolin ("Lady Luck") in Farmington, Pennsylvania expired and was not renewed. The Company completed the sale of substantially all its assets at Lady Luck for an immaterial amount.
For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the Condensed Consolidated Statements of Comprehensive Income. See the Reconciliation of Comprehensive Income to Adjusted EBITDA included in this section for additional information.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
25


Governmental Regulations and Legislative Changes
We are subject to various federal, state, and international laws and regulations that affect our businesses. The ownership, operation, and management of our Live and Historical Racing, TwinSpires, and Gaming segments, as well as our other operations, are subject to regulation under the laws and regulations of each of the jurisdictions in which we operate. The ownership, operation, and management of our businesses and properties are also subject to legislative actions at both the federal and state level. The following update on our regulatory and legislative actions should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023, including Part I - Item 1, "Business" for a discussion of regulatory and legislative changes.
Specific State Gaming Regulations
Louisiana
In Louisiana, the 2021 Historical Horse Racing Act (the "2021 HHR Act") allows off-track betting facilities ("OTBs") to have up to 50 HRMs. On October 25, 2022, a number of individual plaintiffs associated with video poker and truckstops, filed a lawsuit in the 19th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including our Fair Grounds Racecourse and Slots property, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum. On June 8, 2023, plaintiffs filed a motion for summary judgment on the constitutional issues raised in their complaint and a hearing was conducted on September 11, 2023.
On February 23, 2024 the judge issued a ruling in favor of plaintiffs granting summary judgment stating that: (i) historical horseracing is a new form of gaming not specifically authorized by law prior to 1996; (ii) historical horseracing may not be conducted in any parish of the state unless voters approve it through referendum; and (iii) the 2021 HHR Act that authorized historical horseracing is unconstitutional. The summary judgment, which was certified as final for purposes of appeal, was entered on March 18, 2024, and the Company, along with other interested parties including the Louisiana Racing Commission, filed a joint motion for a suspensive appeal, which was entered on March 26, 2024. The suspensive appeal allows the continued operation of HHR during the pendency of the appeal before the Louisiana Supreme Court. The Company intends to vigorously defend the constitutionality of the HHR Act.
As of March 31, 2024, the Company had approximately 500 HRMs in OTBs in Louisiana. If the 2021 HHR Act is determined to be unconstitutional it could have an adverse impact on our Louisiana HRM results which are reported in our Gaming segment.
Consolidated Financial Results
The following table reflects our net revenue, operating income, net income, Adjusted EBITDA, and certain other financial information:
Three Months Ended March 31,
(in millions)20242023Change
Net revenue$590.9$559.5$31.4 
Operating income126.3119.96.4 
Operating income margin21 %21 %
Net income80.4155.7(75.3)
Adjusted EBITDA242.5222.919.6 
Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023
Net revenue increased $31.4 million driven by a $30.7 million increase from the Live and Historical Racing segment primarily due to the opening of our Rosie's Emporia property in September 2023 and growth at our other HRM properties and an $11.8 million increase from the TwinSpires segment primarily due the Exacta Transaction. Partially offsetting these increases was an $11.1 million decrease primarily from the Gaming segment driven by our decision not to renew the management agreement at Lady Luck in June 2023 and inclement weather in January 2024 across many of our Gaming properties.
Operating income increased $6.4 million due to a $16.8 million increase in the Live and Historical Racing segment primarily due to savings as a result of the Exacta Transaction, the opening of our Rosie's Emporia property in September 2023, and growth at our other HRM properties, a $9.6 million increase in the TwinSpires segment primarily due to the Exacta Transaction, and decreased All Other net operating expenses of $2.6 million primarily related to
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
26


Arlington exit costs in 2023. Partially offsetting these increases to operating income was a $15.8 million decrease in the Gaming segment primarily due to inclement weather at many of our Gaming properties in January 2024, a $4.3 million increase in transaction expenses, and a $2.5 million increase in selling, general and administrative expenses.
Net income decreased $75.3 million. The following impacted the comparability of the Company's net income for the three months ended March 31, 2024 compared to the three months ended March 31, 2023: an $86.2 million after-tax gain on the sale of the Arlington property in the prior year quarter and a $4.4 million after-tax net increase in adjustments related to transaction, pre-opening and other expenses, partially offset by a $5.2 million after-tax increase of other recoveries, net related to non-recurring insurance claim recoveries. Excluding these items, net income increased $10.1 million primarily due to a $14.7 million after-tax increase primarily driven by the results of our operations, partially offset by a $4.6 million after-tax increase in interest expense associated with higher outstanding debt balances and higher interest rates.
Adjusted EBITDA increased $19.6 million driven by an $18.7 million increase from the Live and Historical Racing segment primarily due to $5.8 million of savings as a result of the Exacta Transaction and a $12.9 million increase due to the growth at our HRM properties and the opening of our Rosie's Emporia property in September 2023, and a $10.2 million increase from the TwinSpires segment primarily attributable to the Exacta Transaction. Partially offsetting these increases was a $6.7 million decrease from the Gaming segment primarily due to inclement weather in January 2024 at many of our Gaming properties and a decrease in All Other adjusted EBITDA of $2.6 million driven by increased corporate compensation expenses and administrative fees.
Revenue by Segment
The following table presents net revenue for our segments, including intercompany revenue:
Three Months Ended March 31,Change
(in millions)20242023
Live and Historical Racing$248.9 $215.8 $33.1 
TwinSpires114.1 96.3 17.8 
Gaming243.2 251.6 (8.4)
All Other— 0.3 (0.3)
Eliminations(15.3)(4.5)(10.8)
Net Revenue$590.9 $559.5 $31.4 
Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023
Live and Historical Racing revenue increased $33.1 million due to an $18.3 million increase attributable to growth at our Kentucky HRM properties, a $13.5 million increase attributable to growth at our Virginia properties and the opening of our Rosie's Emporia property in September 2023, and a $1.3 million increase at our other Live and Historical Racing properties.
TwinSpires revenue increased $17.8 million due to a $14.3 million increase attributable to the Exacta Transaction, a $2.3 million increase attributable to our retail and online sports betting business, and a $1.2 million increase in Horse Racing revenue.
Gaming revenue decreased $8.4 million due to a $6.3 million decrease in Pennsylvania primarily due to our decision not to renew the management agreement at Lady Luck in June 2023 and a $2.1 million net decrease at our other gaming properties primarily due to inclement weather in January 2024.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
27


Consolidated Operating Expense
The following table is a summary of our consolidated operating expense:
Three Months Ended March 31,Change
(in millions)20242023
Gaming taxes and purses$150.4$145.5$4.9 
Salaries and benefits74.962.912.0 
Content expense38.242.4(4.2)
Selling, general and administrative expense54.852.32.5 
Depreciation and amortization46.937.99.0 
Marketing and advertising19.218.01.2 
Maintenance, insurance and utilities20.920.9— 
Property and other taxes6.46.8(0.4)
Transaction expense, net4.1(0.2)4.3 
Other operating expense48.853.1(4.3)
Total expense$464.6$439.6$25.0 
Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023
Increased gaming taxes and purses, salaries and benefits, selling, general and administrative, marketing and advertising, and depreciation and amortization increased primarily due to the Exacta Transaction in August 2023, the opening of our Rosie's Emporia property in late September 2023 and our Derby City Gaming Downtown property in December 2023, and added costs related to Terre Haute Casino in Indiana that opened on April 5, 2024 and The Rose HRM entertainment facility that is scheduled to open in late September 2024.
Adjusted EBITDA
We believe that the use of Adjusted EBITDA as a key performance measure of the results of operations enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA is a supplemental measure of our performance that is not required by or presented in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP.
Three Months Ended March 31,Change
(in millions)20242023
Live and Historical Racing$100.8 $82.1 $18.7 
TwinSpires39.6 29.4 10.2 
Gaming122.8 129.5 (6.7)
Total Segment Adjusted EBITDA263.2 241.0 22.2 
All Other(20.7)(18.1)(2.6)
Total Adjusted EBITDA$242.5 $222.9 $19.6 
Three Months Ended March 31, 2024, Compared to Three Months Ended March 31, 2023
Live and Historical Racing Adjusted EBITDA increased $18.7 million due to a $12.9 million increase attributable to growth at our Virginia properties which includes $5.8 million of savings related to the Exacta Transaction, and an $8.5 million increase from our Kentucky HRM properties. These increases were offset by a $2.7 million decrease at Churchill Downs Racetrack driven by increased maintenance and promotional expenses in preparation for the 150th Kentucky Oaks and Derby.
TwinSpires Adjusted EBITDA increased $10.2 million due to a $9.4 million increase attributable to the Exacta Transaction and a $1.4 million increase attributable to our retail and online sports betting business, partially offset by a $0.6 million decrease in Horse Racing primarily driven by lower retail volume.
Gaming Adjusted EBITDA decreased $6.7 million primarily due to inclement weather in January 2024 at many of our gaming properties.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
28


All Other Adjusted EBITDA decreased $2.6 million driven primarily by increased corporate compensation related expenses and other corporate administrative expenses.
Reconciliation of Comprehensive Income to Adjusted EBITDA
Three Months Ended March 31,Change
(in millions)20242023
Net income and comprehensive income$80.4 $155.7 $(75.3)
Additions:
Depreciation and amortization46.9 37.9 9.0 
Interest expense70.4 64.7 5.7 
Income tax provision21.4 53.2 (31.8)
EBITDA$219.1 $311.5 $(92.4)
Adjustments to EBITDA:
Stock-based compensation expense$7.2 $8.6 $(1.4)
Pre-opening expense8.3 3.2 5.1 
Other expense, net0.2 3.7 (3.5)
Transaction expense, net4.1 (0.2)4.3 
Other income, expense:
Interest, depreciation and amortization expense related to equity investments10.3 9.8 0.5 
Other charges and recoveries, net(6.7)0.3 (7.0)
Gain on sale of Arlington— (114.0)114.0 
Total adjustments to EBITDA23.4 (88.6)112.0 
Adjusted EBITDA$242.5 $222.9 $19.6 
Consolidated Balance Sheet
The following is a summary of our overall financial position:
(in millions)March 31, 2024December 31, 2023Change
Total assets$7,066.8 $6,955.5 $111.3 
Total liabilities6,239.9 6,061.9 178.0 
Total sha