Churchill Downs Incorporated (CHDN): BCG Matrix [Dec-2025 Updated]

You need a clear-eyed view of Churchill Downs Incorporated's (CHDN) business units right now, so we've mapped them using the BCG Matrix to show exactly where the action is. We're talking about Stars driving 21% revenue growth in HRMs and a record $349 million Derby handle, balanced against Cash Cows that delivered $455 million in free cash flow in the first half of 2025. Still, you need to know which Dogs to divest and which Question Marks-like the new Casino Salem-are worth the high-risk capital. Keep reading to see the full breakdown.

Background of Churchill Downs Incorporated (CHDN)

You're looking at Churchill Downs Incorporated (CHDN) as of late 2025, and the story is one of strong operational growth being somewhat overshadowed by one-time charges and strategic capital decisions. Honestly, the top line looks great; the company reported a record third quarter in 2025, with net revenue hitting $683.0 million, marking a 9% jump compared to the same period last year.

The engine driving this revenue growth is clearly the Live and Historical Racing segment. For the third quarter ending September 30, 2025, this segment's revenue surged 21% year-over-year, reaching $305.7 million. This performance is directly tied to expansion efforts in key states. For instance, the Virginia Historical Racing Machine (HRM) venues added $30.1 million to Q3 revenue, following the August 2025 completion of the Rosie's Richmond expansion, which added 450 incremental machines. Similarly, Kentucky HRM venues contributed an increase of $20.9 million in Q3 revenue, helped by the February 2025 opening of Owensboro Racing and Gaming.

The company has also been active on the acquisition front, closing on 90% of Casino Salem in New Hampshire for $180 million in August 2025. This new asset contributed $2.3 million to the Q3 revenue increase. However, not all parts of the portfolio are firing on all cylinders; the broader Churchill Downs gaming sources revenue actually decreased by $4.8 million in Q3 2025, partly due to stopping HHR operations in Louisiana.

On the profitability side, Adjusted EBITDA was a record $262.3 million in Q3 2025, up 11%. But, if you look at GAAP net income, it fell sharply by 42% to $38.1 million. That big drop is due to a significant, one-time, non-cash impairment charge of $31.0 million related to Chasers' gaming rights-it's important to separate that noise from the core operations.

Strategically, you see a clear focus on financial discipline amidst macroeconomic uncertainty. Churchill Downs Incorporated announced it is pausing major, multi-year capital projects at the flagship Racetrack, like The Skye and the Conservatory, due to volatile construction costs. Still, management is proceeding with smaller, high-end upgrades to the Finish Line Suites and The Mansion, and they've secured a win with the announcement that the Kentucky Oaks will air on primetime on NBC Sports in 2026. The company ended Q3 2025 with net bank leverage at 4.1x and recently approved a $0.438 per share dividend for January 2026.

Churchill Downs Incorporated (CHDN) - BCG Matrix: Stars

You're looking at the engine room of Churchill Downs Incorporated's current growth, the segments that command high market share in expanding areas. These are the Stars, the units demanding heavy investment to maintain their lead, but which promise to become the future Cash Cows.

The Historical Racing Machines (HRMs) in Kentucky and Virginia are definitely leading this charge. For the third quarter of 2025, the Live and Historical Racing segment revenue surged by 21% year-over-year, reaching $305.7 million from $252.4 million in the prior year period. The segment's Adjusted EBITDA also saw a significant jump, rising by $23.4 million to reach $116.4 million for the quarter, reflecting the high-growth nature of these protected markets, which the outline suggests is underpinned by a 25% EBITDA growth rate.

This growth is fueled by specific, successful market entries and expansions. Here's a look at the incremental revenue these new venues drove, based on earlier 2025 reporting:

• The Rose Gaming Resort in Northern Virginia contributed $18.2 million in incremental revenue in Q1 2025.
• Owensboro Racing and Gaming in Kentucky helped the state's HRM locations deliver an $8.9 million revenue increase in Q1 2025.
• The company also opened Roseshire Gaming Parlor in Henrico County, Virginia, on September 29, 2025, with 175 historical racing machines.

The crown jewel, the Kentucky Derby, continues to demonstrate its unparalleled market dominance, setting records that solidify its Star status. The second quarter of 2025, which includes the event, saw an all-time record all-sources handle of $349 million for the Derby Day card alone. This event's media reach is also expanding, drawing an average viewership of 17.7 million and a peak viewership of 21.8 million.

Churchill Downs Incorporated is reinvesting heavily into this premium experience, recognizing the need to support this high-growth asset. The Victory Run project at Churchill Downs Racetrack is a clear example of this investment strategy. This strategic capital project is budgeted between $280 million and $300 million, designed to monetize premium demand through its targeted completion before the 2028 Kentucky Derby.

You can see the financial scale of these key Star assets below:

The investment in the racetrack itself is substantial, aiming to enhance the premium seating capacity from approximately 6,400 existing seats to around 7,800 new premium spots, including private suites.

• The Derby Day wagering handle was up 9% year-over-year from the prior record.
• The Kentucky Derby average viewership of 17.7 million was up 6% versus the prior year.
• The peak viewership of 21.8 million was up 8% versus the prior year.
• The Victory Run project completion is targeted for the 2028 Kentucky Derby.

Churchill Downs Incorporated (CHDN) - BCG Matrix: Cash Cows

You're analyzing Churchill Downs Incorporated (CHDN) as a seasoned analyst, and the Cash Cow quadrant is where the bedrock of the company's financial stability resides. These are the established businesses with high market share in mature segments, requiring minimal growth investment but churning out significant cash.

The iconic Churchill Downs Racetrack operations, outside of the high-growth Derby Week, serve as a prime example. This core business provides a stable, high-margin licensing and sponsorship revenue stream, which is the definition of a reliable cash generator. The company's commitment to shareholder returns is evident in its dividend history; on January 3, 2025, Churchill Downs Incorporated paid a dividend of $$0.409$ per share, marking the fourteenth consecutive year of an increased dividend per share. This consistency is only possible because of the steady cash flow from these mature assets.

Wholly-owned regional gaming properties, which include the newer Terre Haute Casino Resort and the expanding Historical Racing Machine (HRM) venues, fit squarely here. These properties generate substantial, steady cash flow, even when facing regional softness or increased competition. For the first quarter of 2025, the Gaming segment revenue reached $$267.2$ million, representing a $9.9\%$ year-over-year rise. The Live and Historical Racing segment, which includes these gaming components, posted even stronger revenue at $$276.4$ million in Q1 2025, an $11\%$ increase.

TwinSpires Horse Racing, the established online wagering platform, maintains a dominant market share in the core horse racing wagering space, generating consistent cash flow, especially during the peak of Derby Week. While the sports betting component faced headwinds, the overall Wagering Services and Solutions segment brought in $$115.8$ million in revenue for Q1 2025. The company's ability to support its overall structure comes from this consistent cash generation, which is quantified by the overall firm performance.

The company's overall financial strength, driven by these cash cows, is clear in its liquidity metrics. Churchill Downs Incorporated generated $$455$ million in free cash flow in the first half of 2025. This substantial cash generation supports the ongoing capital structure management, including a new $$500$ million share repurchase program approved in March 2025, and the aforementioned dividend increases. The core cash cow operations are the engine funding corporate overhead and shareholder rewards.

Here's a quick look at the segment performance underpinning the Cash Cow status for Q1 2025:

The strategy here is to maintain productivity and milk the gains passively, only investing in infrastructure that boosts efficiency, like the planned upgrades to the Finish Line Suites and The Mansion for the 152nd Kentucky Derby. You want to protect these high-share, low-growth assets.

Key characteristics supporting the Cash Cow classification for Churchill Downs Incorporated:

• The iconic Churchill Downs Racetrack operations provide stable, high-margin licensing revenue.
• Regional gaming properties delivered Q1 2025 revenue of $$267.2$ million.
• TwinSpires maintains a dominant market share in horse racing wagering.
• The company generated $$455$ million in free cash flow in the first half of 2025.
• The company has a fourteenth consecutive year of increased dividend payments as of January 2025.

Finance: review the capital allocation plan for the Victory Run investment against H1 2025 FCF generation by next Tuesday.

Churchill Downs Incorporated (CHDN) - BCG Matrix: Dogs

Dogs, are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

The following areas within Churchill Downs Incorporated are positioned in the Dogs quadrant, characterized by low market share in their respective sub-markets and/or clear strategic withdrawal due to underperformance.

TwinSpires Sports Betting Exit

The sports betting arm of TwinSpires showed clear signs of being a Dog, leading to a strategic exit from a market. For the first quarter of 2025, the sports betting business saw a revenue decline of $2.2 million. This decline was a factor in the company officially exiting Kentucky's sportsbook market in February 2025. The segment also contributed to a $1.1 million decrease in Q1 2025 Adjusted EBITDA.

Underperforming Regional Casino Assets

Certain wholly-owned gaming properties experienced softness and competitive pressure throughout the first half of 2025. In the second quarter of 2025, the Adjusted EBITDA for wholly owned gaming properties decreased by $11.6 million year-over-year. Specifically, the eight other wholly owned gaming properties saw a net Adjusted EBITDA decrease of $3.2 million in Q2 2025. The casino margin for these properties was down 1.3 points compared to the same period in 2024. The Terre Haute Casino Resort also contributed a $7.0 million decrease to the wholly owned gaming properties' Adjusted EBITDA in Q2 2025, primarily due to a higher effective state gaming tax rate as expected.

You're looking at assets where the market growth isn't material enough to overcome local competitive dynamics or tax structure changes. It's a clear signal to minimize exposure.

Divested or Downsized HRM Operations

Strategic downsizing occurred following regulatory changes in Louisiana. Churchill Downs Incorporated moved approximately 500 Historical Racing Machine (HRM) machines from Louisiana to higher-growth markets like Virginia and Kentucky in 2025. The cessation of HRM operations in Louisiana resulted in a $5.2 million revenue decrease in Q2 2025. This move also contributed to a $1.4 million net decrease in Adjusted EBITDA from wholly owned gaming properties in Q2 2025.

Here's the quick math on the Louisiana impact in Q2 2025:

Older, Smaller Virginia HRM Venues Facing Headwinds

While Virginia HRM operations, overall, are a growth driver, the older, smaller venues are showing signs of moderation in performance, fitting the low-growth/low-share profile within that segment. For the third quarter of 2025, the four other Virginia venues saw a net revenue decrease of $1.0 million. These facilities include locations such as Vinton and Hampton, which are part of the eight HRM facilities in the state.

Key financial indicators pointing to Dog status or required divestiture/downsizing:

• TwinSpires Sports Betting Q1 2025 revenue decline: $2.2 million.
• Wholly Owned Gaming Properties Q2 2025 Adjusted EBITDA decrease: $11.6 million.
• Louisiana HRM machines moved: Approximately 500 units.
• Virginia Other HRM Venues Q3 2025 net revenue decrease: $1.0 million.

Finance: draft 13-week cash view by Friday.

Churchill Downs Incorporated (CHDN) - BCG Matrix: Question Marks

You're looking at business units that are burning cash to fuel rapid expansion, hoping they mature into market leaders. For Churchill Downs Incorporated, these Question Marks are characterized by high market growth potential but currently hold a low relative market share, demanding significant investment.

The B2B HRM technology business, Exacta, fits this profile. This segment is in a growing market driven by new deployments of Historical Horse Racing Machines (HRMs). In the third quarter of 2025, Exacta contributed a revenue increase of $3.0 million, with an associated Adjusted EBITDA increase of $2.8 million, both attributable to incremental HRMs in Virginia and New Hampshire. This growth trajectory is supported by its Q1 2025 performance, where Exacta added $3.1 million in revenue.

The Casino Salem, New Hampshire acquisition represents a high-risk, high-reward expansion into a new geographic market. Churchill Downs Incorporated completed the purchase of a majority stake for an investment of $180 million, financed using its existing credit facility. The initial phase opened on July 9, 2025, featuring approximately 100 HRMs and 13 live table games. Early contributions were evident in Q3 2025, with the temporary facility adding $2.3 million to revenue.

The full-scale Terre Haute Casino Resort in Indiana, which began operations in April 2024, is still in its ramp-up phase, consuming resources while establishing market share. This $290 million, 400,000 square-foot development injected $31.6 million into revenue in the first quarter of 2025 alone. The opening also drove an $11.5 million increase in Gaming segment Adjusted EBITDA for Q1 2025.

International expansion efforts for the Kentucky Derby brand are focused on extending brand relevance into dynamic global markets, which requires upfront investment for future returns. The 'Road to the Kentucky Derby' series was significantly enhanced in October 2025 with the addition of three new points-bearing races in Dubai and Saudi Arabia, bringing the total European/Middle East series to 10 races. The points structure for these new races is:

• UAE 2000 Guineas: Points awarded are 20-10-6-4-2.
• Saudi Derby: Points awarded are 30-15-9-6-3.
• Dubai Road to the Kentucky Derby Stakes: Points awarded are 20-10-6-4-2.

The series culminates with the $1 million UAE Derby on March 28, 2026, which awards 100-60-30-15-10 points to the top five finishers.

The cash consumption and low current returns relative to investment are visible across these units, which Churchill Downs Incorporated must decide whether to heavily fund for market share gains or divest. The table below summarizes the key financial metrics associated with these Question Mark candidates as of the latest reported data in 2025.

The strategy here is clear: invest to grow market share quickly, especially in the HRM-driven Exacta and the new Casino Salem, or risk these high-growth ventures becoming Dogs. Finance: review capital allocation plan for Q1 2026 by end of December.