CDI Reports Increased Revenues at Kentucky Operations

The focus on its Kentucky historical horse racing and racing operations delivered third-quarter results for Churchill Downs Inc., which reported a 7.7% increase in adjusted earnings to $61.4 million for the three months ending Sept. 30 when compared with the corresponding quarter of 2021.

Compared with the third quarter of 2021, the company's "live and historical racing" segment reported a $20.9 million increase in revenue to $102.4 million in the quarter, up 26%. Of that $20.9 million bump, the company attributed a $6.5 million increase to Churchill Downs racetrack as a result of increased handle from holding more live race days in the third quarter of 2022 as compared to the same quarter of 2021. 

The company also reported a $6.2 million increase at Oak Grove Racing, Gaming and Hotel, a $3.2 million increase at Turfway Park as a result of the opening of its on-site historical racing facility Sept. 1, a $2.6 million increase at Newport Racing & Gaming, a $1.3 million increase at Derby City Gaming, and a $1.1 million increase related to the acquisitions of Chasers Poker Room in Salem, N.H. and Ellis Park in September.

For the segment, adjusted earnings increased $6.8 million due to a $1.8 million increase at Churchill Downs racetrack driven by the aforementioned increase in race days and a $5 million increase at HHR properties driven primarily by a $3.1 million increase at Oak Grove and a $1.6 million increase at Newport.

For the company's full quarterly report, click here.

The Louisville-based company remains bullish on its home state. As previously reported, CDI on Sept. 26 completed the acquisition of Ellis Park in Henderson for total consideration of $79 million in cash, subject to certain working capital and other purchase price adjustments. Ellis is a Thoroughbred track and HHR gaming facility located just south of Evansville, Ind. It features approximately 300 HHR machines.

In acquiring Ellis, CDI also assumes the opportunity to construct a track extension facility with HHR machines in Owensboro, Ky. Over the next year, CDI expects its total investment in Henderson and Daviess Counties to be approximately $75 million in addition to the purchase price.

For its TwinSpires online gaming segment, CDI reported a $1.6 million decrease in quarter-over-quarter revenue, but those losses of revenue stemmed from the company exiting the online sports betting and gaming business—resulting in a $3.4 million decrease. On the pari-mutuel gaming side, news was good for the TwinSpires advance-deposit wagering platform, which reported a $1.8 million increase in horse racing handle.

"The increase in horse racing net revenue was driven by increased handle from our high-wagering-volume customer base," CDI noted. Some of those gains were offset because of increased expenses for racing content.

With the company abandoning the online sports wagering and casino business, it saved $11.1 million in marketing and promotional expenses during the quarter. This helped the segment's adjusted earnings improve 41% to $31.1 million.

The company did see a decrease in revenues and adjusted earnings it attributed to Arlington International Racecourse not conducting live racing in the third quarter of 2022. Churchill ceased the Chicago area track's racing and simulcast operations at the end of 2021. The company said it is excluding Arlington's operating results from adjusted earnings in 2022 pending the sale of the property to the National Football League's Chicago Bears.