Churchill Downs NASDAQ: CHDN reported record third-quarter net revenue of $696 million and record adjusted EBITDA of $264 million, led by gains in its wagering services and solutions and gaming segments. The company also outlined plans to sell nine wholly owned regional gaming properties, expand its horse-racing and historical racing machine businesses, and launch a new Thoroughbred Championship Series in 2027.
Chief Executive Officer Bill Carstanjen said the company expects to announce executed transactions for the regional gaming properties by year-end. He said the assets are generally newer and better maintained than comparable properties and produce strong cash flow. Churchill Downs plans to use proceeds from the sales to reduce leverage, repurchase shares and selectively invest in Churchill Downs Racetrack and other growth projects.
The board authorized a new $750 million share-repurchase program during the week of the earnings call. Chief Financial Officer Marcia Dall said the company repurchased more than $48 million of shares during the third quarter and another $76 million between Oct. 1 and Oct. 27. The board also approved a 7% dividend increase payable Jan. 5, 2027, marking the company’s 16th consecutive year of dividend-per-share increases.
Regional Gaming Sale and Capital Position
Carstanjen said the regional gaming divestiture process, being managed with Macquarie Capital, was progressing well despite higher interest rates and consumer uncertainty affecting the broader mergers-and-acquisitions market. Each of the nine properties has been marketed individually, he said, meaning the outcome is expected to consist of several smaller transactions rather than a single sale.
Dall said the company generated $603 million in free cash flow, or $8.59 per share, through the first nine months of 2026. Churchill Downs spent $57 million on maintenance capital and $119 million on project capital during that period. It now expects full-year maintenance capital spending of $90 million to $100 million and project capital spending of $160 million to $180 million. Project capital spending is expected to total $200 million to $250 million in 2027.
Bank leverage was 3.8 times at quarter-end. The company expects leverage to remain about 3.8 to 3.9 times through year-end before declining below 3.0 times after completing the regional gaming asset sales, Dall said.
Kentucky Derby Growth and Thoroughbred Championship Series
Carstanjen described Churchill Downs Racetrack and the Kentucky Derby as the company’s “crown jewel” and said the company is working to broaden the event’s reach and earnings power through capital projects, guest-experience improvements, sponsorships, media engagement and new wagering products.
Ticket demand for the 153rd Kentucky Derby, scheduled for early May 2027, was ahead of the comparable pace for the prior year’s Derby, according to Carstanjen. In closing remarks, he clarified that ticket sales were up about 25% year over year and that roughly 40% of overall ticket inventory had been sold at that stage of the sales cycle.
Construction is underway on Victory Run, a new seating and hospitality development located just past the finish line. The project is scheduled for completion ahead of the 2028 Derby. For 2027, the area will include interim covered stadium seating and enhanced amenities. The completed development is planned to feature private suites, indoor and outdoor dining, and covered box seats.
The company also announced a multiyear partnership with Visa, which will become the preferred payment partner of Churchill Downs and the Kentucky Derby. Carstanjen said the arrangement includes sponsorship and hospitality elements as well as exclusive Derby Week offers and experiences for Visa clients and cardholders.
In 2027, Churchill Downs plans to launch the Thoroughbred Championship Series, or TCS, in partnership with the New York Racing Association. The Derby division will include six races beginning with the Kentucky Derby and continuing through the Belmont Stakes, a July race at Churchill Downs, two Saratoga races and a September championship race at Churchill Downs. The series will provide an additional $5 million in prize money beyond the individual race purses.
The Oaks division will include four races for fillies, beginning with the Kentucky Oaks. The top three horses will share a $1 million prize pool, and the winner will be invited to compete in the Derby division’s championship race for an opportunity to earn an additional $1 million bonus.
Carstanjen said the TCS is intended to create a season-long narrative around horse racing, with potential revenue opportunities from wagering, admissions, sponsorships, licensing, media rights and hospitality. He said the company expects wagering to contribute early, while media-rights development will take longer.
HRM Expansion and Gaming Trends
In the live and historical racing segment, Kentucky HRM properties delivered record revenue, while adjusted EBITDA increased 10% from the prior-year quarter. Dall said Southwestern and Northern Kentucky locations posted double-digit adjusted EBITDA growth, and Louisville venues also produced a strong quarter.
Virginia adjusted EBITDA declined by $6 million excluding a one-time business interruption insurance recovery recorded in the prior-year period. Central Virginia venues faced competition from the temporary Petersburg casino, which opened in January, along with approximately $5 million in expenses tied to a new tax on live racing days that took effect July 1.
In Northern Virginia, The Rose continued to grow both year over year and sequentially, driven by rated and unrated play, customer awareness, marketing and higher spending per visit. Carstanjen said the company believes the market has significant room for further development.
Churchill Downs received final county approval to relocate and expand its Collinsville HRM venue to Henry County, closer to the North Carolina border. The company expects to acquire land for a 150-unit venue. It is also awaiting referendum results in Pulaski and Amherst County that could allow two additional 150-machine locations. The company currently operates about 4,700 HRMs in Virginia and has the right to deploy up to 5,000 across 10 sites.
The company is also expanding electronic table games. Roulette games have attracted new customers and reactivated inactive HRM customers in Kentucky, Carstanjen said. Churchill Downs expects to introduce craps electronic table games near year-end and is developing blackjack games for 2027.
In New Hampshire, Rockingham Grand Casino remains on schedule and on budget for a mid-2027 opening at The Mall at Rockingham Park in Salem. The property is expected to include roughly 800 to 850 HRMs and slots, 32 table games and an event center.
TwinSpires and Consumer Trends
TwinSpires, the company’s online horse-racing wagering platform, continued to post wagering and EBITDA growth, Carstanjen said. Recent product additions include Jackpot 8, which requires bettors to select the first eight finishers in exact order, and Easy Bets, which allows wagers on odd- or even-numbered horses. The platform also introduced AI-based features including Paddock PRO AI and AI Race Preview.
Within the gaming segment, adjusted EBITDA increased 4% from the prior-year quarter. Nearly all wholly owned regional gaming properties grew compared with the same period a year earlier, while same-store margins were consistent with the prior-year quarter. Dall said consumer trends improved both year over year and sequentially, with higher-value rated play supporting growth and lower-value unrated play remaining resilient.
About Churchill Downs (NASDAQ:CHDN)
Churchill Downs Incorporated NASDAQ: CHDN is a gaming, racing and entertainment company best known for operating Churchill Downs Racetrack in Louisville, Kentucky, the home of the Kentucky Derby. The company traces its history to the opening of Churchill Downs in 1875 and has expanded its operations beyond traditional Thoroughbred racing.
Its business activities include live and historical horse racing, pari-mutuel wagering, casino gaming, video lottery and related entertainment offerings.
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