Churchill Downs Reports Record Revenue, Expects Record Kentucky Derby

Written By Adam Hensley on May 1, 2023 - Last Updated on June 23, 2023
Churchill Downs first quarter revenue

Churchill Downs Inc. provided a quarterly earnings update as the 2023 Kentucky Derby nears.

On Thursday, it held its call, announcing a record first quarter in revenue. The Louisville-based company expects quite a turnout from Kentucky horse racing bettors in the near future.

Churchill Downs projects a “record” 2023 Kentucky Derby betting handle and an uptick in the historical horse racing industry.

Here’s a closer look at some of the key points during Churchill Downs’ quarterly earnings call.

Churchill Downs posts record first-quarter revenue

The first quarter of 2023 was a successful one for Churchill Downs.

“We delivered record first quarter net revenue of $560 million and record adjusted EBITDA of $223 million,” CEO Bill Carstanjen said. “We were pleased with the performance of all of our segments and our expectations remain high for the rest of the year.”

That revenue is a massive leap from the first quarter of 2022. Last year, first quarter revenue stood at $364.1 million.

Quarter one EBITDA proved to be up nearly $95 million from the previous year.

Churchill Downs’ net income reached $155.7 million as well. That’s roughly a $113 million increase from the same timeframe last year.

Historical racing machines remain an important focus

Historical racing machines (HRMs) are one of Churchill Downs’ growing ventures.

The machines provide the rush of betting on horse racing but in more of a slot form. Bettors wager on the outcome of thousands of previous horse races. The races are random, as customers have no information on specific horses, jockeys or location. There’s no skill involved.

Carstanjen noted that HRMs are one of Churchill Down’s key focuses for the next five to 10 years.

“I am of the view that we haven’t reached full maturity at any of our HRM properties,” he said. “… So, more to come.”

Churchill Downs prepares for a ‘record’ 2023 Kentucky Derby

Carstanjen did not hold back when it came to his thoughts on the upcoming Kentucky Derby.

“Based on advanced reserve ticket sales and other metrics available at this time, we expect to deliver record Derby Week results,” he said.

He added that early ticket sales are underway and are going quickly.

Derby City Gaming location updates

Carstanjen said the downtown location for Derby City Gaming will open sometime in the fourth quarter of this year. The new location will have 500 historical horse racing machines, three bars and a retail store.

Regarding the suburban Derby City Gaming spot, he said progress on the hotel is going well. He expected it to open by the end of the second quarter.

“We have been very happy with how the property has been performing through the significant disruption across the site caused by the floor expansion and the construction of the new hotel,” Carstanjen said.

A closer look at Churchill Downs’ spending in 2023

Churchill Downs EVP and CFO Marcia Dall expressed excitement about the first quarter numbers.

“We believe we’re positioned to continue to grow through the remainder of 2023,” she said.

According to Dall, Churchill Down generated $204 million of free cash flow this past quarter. That’s a $79 million jump year-to-year.

She added that Churchill Downs spent $123 million in the first quarter. That number will continue to grow, as Dall said the spending could land between $575 million and $675 million for the entire year.

Sports betting will fit well with Churchill Downs’ properties

Kentucky sports betting is officially legal, but there’s a bit of a waiting period until it launches. There’s also no telling which sportsbooks will join, although DraftKings Kentucky, BetMGM Kentucky and FanDuel Kentucky feel like locks.

Even so, Churchill Downs stated that it has an approach to this process.

“We can put (sports betting) in our racetracks and also our HRM extensions,” Carstanjen said. “… We find that it does drive traffic to our properties, that it does help the overall energy and flow of people through our properties. So, it’s a really good thing… we actually designed our facilities thinking that this may happen in Kentucky at some point.”

Check out the link provided to find details about KY sports betting promos expected to be available online once the industry officially launches.

Photo by Shutterstock
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Adam Hensley

Adam Hensley is a staff writer for PlayKentucky. His byline has appeared in the Associated Press, Sports Illustrated and sites within the USA Today Network. Hensley graduated from the University of Iowa in 2019 and spent his college career working for the Daily Iowan’s sports department, both as an editor and reporter.

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