Churchill Downs NASDAQ: CHDN reported record second-quarter revenue of $980 million and record adjusted EBITDA of $477 million, marking its sixth consecutive record second quarter for both measures. The company said results were supported by the 152nd Kentucky Derby, growth at historical racing machine properties and continued expansion in wagering services.
Chief Executive Officer William C. Carstanjen said the company is also conducting a strategic review of nine wholly owned regional gaming properties and is exploring sales of those assets individually or in small groups. Churchill Downs plans to use potential proceeds to reduce leverage, selectively reinvest in its core operations and repurchase shares.
Kentucky Derby Drives Record Quarter
The Kentucky Derby was a central contributor to the quarter’s performance. Churchill Downs added Sunday racing on April 26, extending Derby Week and drawing more than 386,000 guests across the week, according to Carstanjen.
The company cited gains in broadcast, attendance, sponsorship and wagering. Broadcast revenue rose $10 million under its new NBC agreement, while peak Kentucky Derby viewership exceeded 24 million viewers, up 12% from the prior year’s record. NBC also aired the Kentucky Oaks in primetime for the first time, generating an average audience of more than 2.4 million viewers.
Derby Week generated more than 500 million social-media impressions, up 84% from 2025, Carstanjen said. The company also set records for all-sources wagering during the week. The Kentucky Derby remains the highest-wagered U.S. horse racing event, while the Kentucky Oaks ranks fourth, he added.
Chief Financial Officer Marcia A. Dall said adjusted EBITDA in the Live and Historical Racing segment increased 7% year over year. Churchill Downs Racetrack adjusted EBITDA rose $16 million, and the company continues to expect Derby Week to generate $15 million to $18 million of incremental adjusted EBITDA in 2026 compared with the previous year.
Carstanjen said the company is working to broaden Derby Week beyond the signature Saturday race, with individual identities and price points across the week’s events. The company intends to keep Kentucky Derby attendance around 150,000 guests, a level it believes supports the strongest guest experience, while directing additional demand to other days including Thurby and the Kentucky Oaks.
Development Plans Continue at Racetrack and in New Hampshire
Churchill Downs said its $285 million Victory Run project remains on schedule and on budget for completion before the 2028 Kentucky Derby. The First Turn development will include premium suites, covered box seating and high-end dining offerings. For the 2027 Derby, the company expects to operate temporary stadium seating, restrooms and concessions beneath the new Victory Run roof while interior and other permanent work continues.
Other planned upgrades for the 2027 Derby include an expansion of the Homestretch Club’s interior amenities and redevelopment around the Winner’s Pagoda infield area. The company expects to add 1,400 temporary seats and test a cabana offering for roughly 500 guests along the turf course. It is also improving underground infrastructure to support a more level music-stage area and potential bar and lounge concepts.
In New Hampshire, Rockingham Grand Casino in Salem remains on track for a mid-2027 opening. Carstanjen described the project as a state-of-the-art gaming and entertainment destination intended to attract guests from across New England.
Regional Gaming Asset Sales Under Review
Following an internal strategic assessment, Churchill Downs is exploring options to sell nine wholly owned regional gaming properties:
- Calder Casino in Florida
- Terre Haute Casino in Indiana
- Hard Rock Casino in Iowa
- Oxford Casino in Maine
- Ocean Downs in Maryland
- Harrah’s and Riverwalk Casinos in Mississippi
- del Lago in New York
- Presque Isle in Pennsylvania
The company has retained Macquarie Capital to assist with the process. Carstanjen said management believes individual sales or small groups of properties are most likely to maximize shareholder value. He characterized the properties as proven assets with histories of cash-flow generation and said the company is pleased with the current transaction environment.
Churchill Downs does not intend to sell its Fair Grounds-related assets in Louisiana, which it said are strategically important to horse racing. It also does not plan to sell its historical racing machine, or HRM, properties in Kentucky, Virginia and New Hampshire.
Carstanjen said the company’s strategy will be centered on three areas: the Kentucky Derby, HRM operations and TwinSpires. The company is seeking to expand Derby attendance, wagering, sponsorship and viewership, while also pursuing further HRM development and distribution of Exacta technology and electronic table games.
HRM and Wagering Growth Offsets Regional Competition
Kentucky HRM properties generated a 10% year-over-year increase in adjusted EBITDA, aided by growth in western and northern Kentucky and the February opening of Marshall Yards. In Virginia, adjusted EBITDA rose 1%, with continued strength at The Rose offsetting competitive pressure at central Virginia locations following the opening of a Petersburg casino earlier this year.
Virginia margins held at 46%, consistent with the prior-year quarter. Carstanjen said the company is considering referendums in Pulaski and Amherst County that could support additional HRM expansion. Colonial Downs has rights to 10 HRM licenses and 5,000 machines in Virginia, though the company is currently working within that machine limit.
In Kentucky, the company’s eight HRM venues operate approximately 5,300 machines. Carstanjen said electronic table games represented about 1% of deployed machines and 2% of revenue, and that the company plans to introduce additional game titles over time.
The Wagering Services and Solutions segment’s adjusted EBITDA rose more than 8%, driven by TwinSpires horse-racing wagering growth and expansion of the Exacta platform. TwinSpires also benefited from lower legal expenses than in the prior-year quarter, Dall said.
Cash Flow, Leverage and Share Repurchases
Churchill Downs generated record first-half free cash flow of $474 million, or $6.70 per share. It spent $79 million on project capital and $38 million on maintenance capital during the first half, while maintaining full-year project capital spending expectations of $180 million to $220 million and maintenance capital spending expectations of $90 million to $110 million.
Bank covenant net leverage stood at 3.7 times at the end of June. The company expects leverage to remain between 3.6 and 3.8 times through year-end, with a potential decline in 2027 based on projected cash flow and any completed regional gaming asset sales.
As of June 30, Churchill Downs had $430 million remaining under its share repurchase authorization and intends to repurchase stock during the second half of the year. The company is also discussing refinancing alternatives with lenders for near-term debt maturities and its credit facility.
About Churchill Downs (NASDAQ:CHDN)
Churchill Downs Incorporated is a leading American entertainment and gaming company best known for operating the Churchill Downs racetrack in Louisville, Kentucky, home of the annual Kentucky Derby. Beyond its signature thoroughbred racing venue, the company manages a diversified portfolio of live racing facilities, casinos, and off-track betting operations. Its services encompass pari-mutuel wagering, historical horse racing machines, and online betting through its TwinSpires platform, reaching horse racing and sports betting enthusiasts nationwide.
In its live racing segment, Churchill Downs oversees a network of racetracks and racing festivals, offering year-round events in multiple states.
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