Churchill Downs (NASDAQ:CHDN) executives told investors the company delivered record net revenue and record Adjusted EBITDA in 2025, surpassing prior highs set in 2024, supported by strong results at the Kentucky Derby, continued expansion of its historical racing machine (HRM) footprint, and growth in its wagering technology business.
Record 2025 results and segment performance
CEO Bill Carstanjen said 2025 marked “another very strong year,” with record Adjusted EBITDA in both the Live and Historical Racing segment and the Wagering Services and Solutions segment, while the Regional Gaming portfolio posted what management described as a solid performance.
Dall highlighted performance by business line:
- Churchill Downs Racetrack: Record full-year Adjusted EBITDA, supported by capital investments, expanded sponsorships, record wagering activity, and a focus on operational efficiency that helped sustain high margins.
- Kentucky HRM: Record Adjusted EBITDA in 2025, aided by the opening of Owensboro in February and strong property-level performance across the portfolio. Dall noted that despite significant January weather events, reported statewide gaming revenue grew at a double-digit rate year over year.
- Virginia HRM: Record Adjusted EBITDA in 2025. The Rose in Northern Virginia continued to ramp, delivering sequential growth in GGR per unit in each quarter of 2025, according to management.
- Wagering Services and Solutions: Adjusted EBITDA rose 7% in 2025, primarily due to continued growth in the Exacta business, which the company acquired in 2024 to vertically integrate HRM technology.
- Regional Gaming: Management cited resilience despite headwinds including roadwork and local curfews in Mississippi and minor weather impacts in December. Same-store, wholly owned casino margins (excluding racing) declined modestly by 0.8 points versus 2024, primarily reflecting Mississippi performance.
Kentucky Derby: renovations, expanded week, and 2026 outlook
Carstanjen said the 2025 Kentucky Derby produced record handle for the Kentucky Derby race, Derby Day program, and the full Derby week, along with the highest television ratings in nearly 40 years. He said results were just below the prior year’s record earnings level, and management expects to return to “consistent and meaningful growth” across metrics in 2026.
He also pointed to recent on-site investments, including the first year of the renovated Starting Gate Pavilion and Courtyard (serving about 8,100 guests) and the second year of operations for the redesigned Paddock.
Looking ahead, management outlined several Derby-related initiatives:
- For the upcoming Derby, the company plans to unveil the newly renovated Mansion and complete renovations of the Finish Line Suites, which management said are on time and on budget.
- The company expects to finish its Victory Run project in time for the 2028 Kentucky Derby, adding premium suites, box seating, and dining options, and increasing net seating capacity in that area by 1,400 people, or 22%.
- For the 2027 Derby, management plans an interim covered upgraded seating product in the Victory Run section.
- The company said it is expanding Derby week, adding racing on Sunday, April 26, which management said will be the first Sunday racing during Derby week in more than 15 years.
- Carstanjen said the Kentucky Oaks will move to prime time on NBC and Peacock between 8:00 p.m. and 9:00 p.m. Eastern.
Dall provided a specific earnings outlook for the flagship event, saying the Derby is expected to generate $15 million to $20 million of incremental Adjusted EBITDA in 2026, citing the NBC broadcast renewal, additional Derby week race days, strong ticket sales, increased sponsorship interest, and continued wagering growth.
On demand trends, Carstanjen said ticket sales and sponsorships have been encouraging and that the company is in the later stages of the sales process. He said demand for the upcoming Derby is strong and that sales are pacing ahead of prior years, including the milestone 150th Kentucky Derby.
HRM expansion, technology strategy, and new electronic table games
Carstanjen detailed continued investment in HRM venues in Kentucky and Virginia and plans to build Rockingham Grand Casino in Salem, New Hampshire. He said the company expects to invest $180 million to $200 million in the project, with construction continuing through 2026 and 2027 and an expected mid-2027 opening. He described the market as attractive, citing more than 800,000 adults within a 20-mile radius and over 4.9 million people in the greater Boston MSA.
Management also discussed regulatory approval in Kentucky to introduce electronic table games (ETGs) based on historical horse racing. Carstanjen said the company introduced its first roulette ETGs in Kentucky HRM facilities in early February. In response to analyst questions, he emphasized that ETGs were not a factor in the prior quarter’s Kentucky growth and described the rollout as early-stage, focused on responsible implementation and regulatory comfort, with additional products such as craps and blackjack under consideration.
On Exacta, Carstanjen said vertical integration has supported margin improvement and will serve as the core technology at Rockingham. He also cited expansion of the business-to-business footprint, including a third-party HRM property in Wichita, Kansas, that opened in December using a significant portion of the company’s technology, and additional technology work in Alabama. He said the company continues to explore international opportunities.
Wagering trends, prediction markets stance, and TwinSpires initiatives
Carstanjen said the company continues to see wagering gravitate toward bigger racing events such as the Derby and the Oaks, describing it as a “flight to quality” and emphasizing a focus on content and premier race-day offerings.
Asked about prediction markets, he said pari-mutuel wagering on horse racing operates under the Interstate Horseracing Act and that taking wagers on racing content requires the company’s express consent. Carstanjen said Churchill Downs has not agreed to provide its content to prediction markets and does not expect prediction markets to be part of the horse racing pari-mutuel wagering landscape in the near future.
Carstanjen also discussed use of AI on the TwinSpires platform, describing an AI analysis tool available to users that provides race-level insights. He said it has been rolled out to five tracks and is planned for expansion, and that the company is also working on a more interactive tool that could allow users to ask questions about specific races or horses.
Capital allocation, free cash flow, and leverage
Dall said Churchill Downs generated a record $700 million of free cash flow in 2025, or $9.75 per share, following a record year in 2024. She reported maintenance capital of $70 million in 2025 and guided to $90 million to $110 million in 2026. Project capital was $205 million in 2025, with a 2026 expectation of $180 million to $220 million, reflecting timing for Derby capital projects and the Rockingham development.
The company also returned capital to shareholders, repurchasing more than 4.2 million shares and returning over $456 million through share repurchases and dividends in 2025. Dall said a dividend paid in January marked the company’s 15th consecutive year of dividends per share increases.
At the end of December 2025, bank covenant net leverage was 4.1 times. Dall said the company expects leverage to fall below 4 times during 2026 based on expected EBITDA growth and the timing of new facility openings.
Management also pointed to potential consumer tailwinds from federal tax law changes, citing provisions such as elimination of taxes on tips up to $25,000, elimination of taxes on overtime, enhanced deductions for individuals 65 and older, and expanded state and local tax deduction limits as factors that could increase discretionary income for some customers.
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.
