Churchill Downs Inc. first-quarter revenue spikes to $155 million
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Net income for Churchill Downs Inc. in the first quarter nearly quadrupled, boosted by recent casino acquisitions in Virginia, New York, and Iowa and the after-tax gains from the sale of Arlington Park outside of Chicago, according to financial statements released on Wednesday afternoon.
Net income for the first quarter was $155.7 million, compared to $42.1 million in the first quarter of last year, according to the financial statements. Churchill booked an $86.2 million after-tax gain on its $197.2 million sale of Arlington to the NFL’s Chicago Bears.
For the quarter, total revenue was $559.5 million, compared to $364.1 million in the first quarter of 2022. Operating expenses jumped from $316.7 million to $439.6 million.
Revenue for Churchill’s “live and historical racing” division was $214.4 million in the quarter, a sharp increase from revenue of $86.0 million in the first quarter of 2022. The division includes the operating results of all of Churchill’s racetracks plus any casinos that offer historical horse racing machines, which are slot-machine-like devices.
Late in 2023, Churchill closed a deal to buy nearly all the assets of Peninsula Pacific Entertainment, including Colonial Downs and its OTBs in Virginia, and all of those properties offer historical horse racing machines. The company also operates historical horse-racing facilities throughout Kentucky.
On a conference call on Thursday morning to discuss the earnings, Bill Carstanjen, the chief executive officer of Churchill, said that the company has decided to relocate a planned historical horse racing facility tied to Ellis Park in Owensboro. When Churchill bought Ellis last year, the previous owner had partially built out a location for an historical horse-racing facility in strip mall, but Carstanjen said that the company will abandon that site and is currently “evaluating new locations” in the Owensboro area.
Revenue for Twinspires.com, Churchill’s account-wagering company, declined from $101.4 million in the first quarter last year to $96.3 million this year. Churchill said the decline was related to its decision in the middle of last year to exit the sports-wagering business.
Earlier this year, the Kentucky legislature passed a bill allowing for sports betting in the state, with licenses restricted to racetracks. Carstanjen said on the conference call that Churchill plans to open as many as nine brick-and-mortar locations at its tracks and casinos in Kentucky once the regulations have been approved, which is expected to be later this year.
“We actually designed our facilities with the idea that this might happen at some point,” Carstanjen said. “It will be a nice bonus.”
Carstanjen also said that Churchill has already reached an agreement with FanDuel, one of the largest sports-betting operators in the U.S., for a “market-access agreement” tied to Churchill’s license. He said he anticipated reaching at least one other agreement with an online operator. The law allows for eight.
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Churchill’s casino gaming division – which does not include the results from the casinos that offer historical horse-racing – had total revenue of $251.6 million in the quarter, compared to $179.2 million in the first quarter of last year. In the Peninsula Pacific Entertainment transaction that closed late last year, Churchill also acquired new casinos in New York and Iowa.
According to its balance sheet, Churchill is carrying $4.35 billion in long-term debt. Interest expense in the first quarter jumped from $21.3 million last year to $64.7 million this year.
On Tuesday, Churchill announced that its board of directors had approved a 2-for-1 stock split, effective for shareholders of record as of May 5. The shares will be distributed on May 19, and the stock will begin trading at the split-adjusted price on May 22, the company said.
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