The famed Churchill Downs Incorporated (CDI), recognized for its illustrious Kentucky Derby, has reported an impressive 36% increase in year-over-year revenue for 2023, tallying up a total of $2.46 billion. This financial leap was primarily driven by an outstanding performance in its live and historical racing segment, which has now eclipsed CDI’s gaming business as the company’s largest revenue generator.
The live and historical racing sector experienced an exceptional surge of 70.4%, amassing revenues of $1.05 billion — a figure that marks a new record within the segment. The growth spurt was largely contributed to CDI’s strategic acquisition of Virginia properties as part of the monumental $2.75 billion procurement of Peninsula Pacific Entertainment (P2E) in November 2022. These Virginia properties alone boosted revenue by $313.9 million.
Additionally, CDI has acknowledged substantial revenue increases from other areas too. The northern Kentucky revenue climbed by $41.2 million, thanks in large part to the inauguration of the Turfway Park in September 2022. Further revenue additions amounting to $36.4 million were brought on board through the purchases of Ellis Park and Chasers.
Derby City Gaming, along with the opening of the new Derby City Gaming Downtown in Kentucky this past December, also made considerable contributions by generating an additional $19.2 million. The Oak Grove location in Southwestern Kentucky added a further $16.5 million to the revenue pool.
As for the gaming segment, CDI saw a healthy 28.1% rise, resulting in $968.6 million in revenue. This was bolstered by fresh assets from New York and Iowa acquired in the P2E deal, which accounted for an extra $230.0 million. Despite these gains, a $16.9 million shortfall in Pennsylvania revenue partially counteracted overall gaming growth. CDI attributed this to the decision not to renew their management contract at Lady Luck.
Moreover, the TwinSpires revenue witnessed a modest ascent of 2.0% to $44.9 million for the year. This growth was propelled by admixing revenues from the historic horse racing provider Exacta, which CDI purchased in August. The results also benefitted from CDI’s broader B2B strategy involving United Tote totalisator fees and an expansion of its retail sports betting operations.
Revenue streams from various other CDI activities also came into play, albeit, at a markedly lower pace, reporting a 72.7% decline to $900,000 for the year. This category includes venue-based income like that from the Arlington International Racecourse.
While this revenue uptick bodes well for CDI, it’s not without its associated cost inflations. The total operating expenditures for 2023 stood 27.6% higher at $1.90 billion, with live and historical racing and gaming segments incurring the most significant jumps.
Some more sobering news came in the form of a contrast against 2022’s financial stats. While the prior year witnessed a $287.0 million profit from asset sales, such instances were non-existent in 2023. Consequently, CDI’s pre-tax profit experienced a 7.7% devaluation to $561.8 million. After taxes, the net profit was reported at $417.3 million, marking a 5.0% decrease. Nevertheless, CDI can find solace in its adjusted EBITDA, which swelled by 39.0% reaching a record high of $1.02 billion.
The final quarter of 2023 brought additional cheer with a 16.8% revenue increase to $561.2 million. Live and historical racing reveled in a 30.0% hike to $228.4 million, an amount equal to that of gaming revenue, which itself saw an 8.3% increase compared to the previous year. The TwinSpires segment too saw revenues ascending by 11.9% to $104.2 million. However, revenue from other areas was down 71.4% to $200,000.
Despite increased spending, operating expenses were trimmed by 2.9% to $455.0 million, aiding a pre-tax profit of $71.9 million — quite the turnaround from the $3.1 million loss reported in the same period for 2022.
For the fourth quarter, net profit sky-rocketed by an astonishing 5,660%, from $1.0 million in the prior year to $57.6 million. Adjusted EBITDA enjoyed a 21.3% elevation to $219.1 million.
Alongside these remarkable fiscal feats, CDI detailed the opening of two new facilities in Virginia and Kentucky. The Rose Gaming Resort in Virginia is scheduled for a September opening, anticipated to feature 1,650 historical racing machines alongside a hotel and assorted dining choices. The total investment is projected at $460 million, with phase two details to be declared later.
Kentuckians can expect the opening of Owensboro Racing & Gaming in the first quarter of 2025. This $100 million venture will include 600 historical racing machines, a retail sportsbook, simulcast wagering, and varied food and bev
erage options, adding to the continued growth and expansion of Churchill Downs Incorporated’s portfolio.
