Churchill Downs Incorporated (CHDN): Business Model Canvas [Dec-2025 Updated]

As someone who's spent two decades dissecting balance sheets, I see Churchill Downs Incorporated (CHDN) not just as a racetrack, but as a sophisticated gaming ecosystem. You're looking at a company that pulled in $540.9 million from live and historical racing alone in Q2 2025, all while managing nearly $1.9 billion in long-term debt. The iconic Kentucky Derby brand is the engine, but the real story is how they've built out regional gaming and the TwinSpires digital platform around it to generate revenue. Dive into the full Business Model Canvas below to see exactly how this unique blend of tradition and high-growth regional expansion creates their value proposition and what it means for future returns.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Key Partnerships

Churchill Downs Incorporated relies on several critical external relationships to power its racing, gaming, and entertainment segments.

Media and Broadcast Rights

• NBC Sports holds exclusive rights to broadcast the GI Kentucky Derby and GI Kentucky Oaks through 2032.
• This extension solidifies NBC as the first media company to present the Kentucky Derby for over three decades, with the partnership beginning in 2001.
• The 151st Kentucky Derby in May 2025 achieved an average viewership of 17.7 million (up 6% versus prior year) and a peak audience of 21.8 million (up 8%).

Premier Event Sponsorships

Sponsorships, particularly around the Kentucky Derby, are key revenue drivers and brand enhancers. Brown-Forman, through its Woodford Reserve brand, is the longest-tenured sponsor.

• Woodford Reserve continues as the Presenting Sponsor of the Kentucky Derby, featuring activations like the $5,000 Woodford Reserve Mint Julep experience.
• Longines serves as the presenting sponsor of the Longines Kentucky Oaks.
• The 2025 Kentucky Derby purse was guaranteed at $5 million.

Kentucky Derby Payout Position (2025)	Purse Amount
First Place Winner	$3.1 million
Second Place	$1 million
Third Place	$500,000
Fourth Place	$250,000
Fifth Place	$150,000

Government and Regulatory Relationships

Operating gaming and racing venues requires ongoing engagement with state and local authorities for licensing and compliance. Churchill Downs Incorporated has made substantial investments in Kentucky's racing infrastructure, which supports purse funding.

• Churchill Downs Incorporated's investment into live and historical horse racing in Kentucky over the last five years exceeded $1 billion.
• The Gaming segment posted Q2 2025 revenue of $266.3 million.
• In Q1 2025, Virginia HRM venues generated $18.2 million in incremental revenue.
• CDI agreed to acquire 90% of Casino Salem in New Hampshire for $180 million, announced in July 2025.
• A signed Fall 2025 agreement must be on file with the Racing Office prior to claiming during the Fall Meet.

Technology Providers

Core operational efficiency is supported by key technology partners, especially in data management and mobile platforms.

• SAP is an official signature partner and the first official technology partner for Churchill Downs Racetrack, the Kentucky Derby, and Kentucky Oaks.
• The SAP agreement includes naming rights for the SAP Starting Gate Suites and presenting partnership for the Kentucky Derby and Churchill Downs mobile applications.
• Veritas Prime was noted as a new partner in 2025, helping with modern HR and operational systems.
• Lumen supports the venue with advanced communications infrastructure.

Horsemen and Trainers

Agreements with horsemen and trainers secure the live racing content that is central to the business.

• The Kentucky Derby purse structure, which benefits horsemen, saw a $2 million increase from the 2019-2023 level of $3 million to the 2024-present level of $5 million guaranteed.
• The Kentucky Thoroughbred Development Fund (KTDF) supplements purses; for example, a Maiden Claiming race on November 20, 2025, included $7,500 from KTDF.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Key Activities

You're looking at the core things Churchill Downs Incorporated does to bring in money, based on their latest reported numbers through the third quarter of 2025. It's a mix of running big events, operating machines, and managing digital platforms.

Operating the annual Kentucky Derby and other live racing meets

The live racing meets, anchored by the Kentucky Derby, are a major focus, especially around media and wagering.

• Betting on the 151st Kentucky Derby alone in Q2 2025 totaled $234.4 million, an increase of 11% from the prior year.
• The full Derby Day card in Q2 2025 saw $349 million in total handle, which was up 9% year-over-year.
• The week of the Derby reached nearly $474 million in handle.
• The race broadcast drew an average of 17.7 million viewers, peaking at 21.8 million viewers.
• The company announced NBC Sports will showcase the Kentucky Oaks on primetime starting in 2026.

Developing and expanding Historical Racing Machine (HRM) venues in key states

This segment, often grouped with Live Racing, is a significant growth engine, particularly in Virginia and Kentucky.

Here's a look at the revenue contribution from the Live and Historical Racing segment across recent quarters:

Period	Segment Revenue (Millions USD)	Year-over-Year Change
Q3 2025	$305.7 million	Up 21%
Q2 2025	$540.9 million	Up more than $50 million
Q1 2025	$276.4 million	Up 11%

Specific geographic contributions highlight expansion efforts:

• In Q3 2025, Virginia HRM venues increased revenue by $30.1 million.
• Kentucky HRM venues increased revenue by $20.9 million in Q3 2025.
• The company opened Roseshire Gaming Parlor in Henrico County, Virginia, in September 2025 with 175 machines.
• The Rosie's Richmond expansion in Virginia was completed in August 2025, adding 450 HHRs.
• The Owensboro Racing and Gaming location in Kentucky opened in February 2025, contributing an $8.9 million revenue increase for Kentucky HRM locations in Q1 2025.
• The cessation of HHR operations in Louisiana resulted in a $6.1 million revenue loss in Q3 2025.

Managing the TwinSpires online Advance-Deposit Wagering (ADW) platform

The digital wagering arm, including the TwinSpires platform and Exacta, shows modest growth, often tied to HRM expansion.

Wagering Services and Solutions segment revenue figures:

• Q3 2025 revenue was $127.2 million, a 7% increase year-over-year.
• Q2 2025 revenue reached $168.4 million, reflecting a 5.3% rise.
• In Q1 2025, TwinSpires revenue was $115.8 million, up from $114.1 million the prior year.
• TwinSpires Horse Racing added $0.8 million in revenue in Q1 2025.
• Exacta benefited from expanded HRM operations, contributing an additional $3.1 million in Q1 2025.

Retail casino and sportsbook operations across multiple states

This covers the brick-and-mortar casino and sports betting activities outside of the core racing/HRM segment.

Gaming segment revenue and profitability:

Period	Segment Revenue (Millions USD)	Segment Adjusted EBITDA (Millions USD)
Q3 2025 (Gaming Sources)	$265.5 million	N/A
Q2 2025	$266.3 million	$127.3 million (down 9.5%)
Q1 2025	$267.2 million	$123.5 million (up from $122.8m in Q1 2024)

• The Q3 2025 gaming revenue of $265.5 million was a decrease of $4.8 million from $270.3 million in Q3 2024.
• The Q1 2025 revenue included $31.6 million from the Terre Haute Casino Resort, which opened in April 2024.
• The sports betting business saw a $2.2 million revenue decline in Q1 2025 following the exit from the Kentucky sportsbook market in February 2025.
• Churchill Downs Incorporated finalized its acquisition of 90% of Casino Salem in New Hampshire for $180 million.

Capital project management for venue renovations and new construction

Churchill Downs Incorporated is executing a multi-year, large-scale renovation plan at Churchill Downs Racetrack.

• CDI anticipates spending between $120 to $130 million of this project capital in 2025.
• The total investment planned across the three major projects between 2025 and 2028 is between $880 million and $1 billion.
• The projects are expected to be fully completed by the 154th Kentucky Derby in May 2028.
• The Skye Reconstruction and Expansion Project has a cost between $455 to $465 million.
• The Conservatory Project cost is estimated between $320 to $330 million.
• The Skye Project replaces 11,500 existing seats with 13,300 seats.
• The Conservatory will replace temporary infield suites with permanent structures for 7,000 guests and include 36 suites.

Finance: draft 13-week cash view by Friday.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Key Resources

You're looking at the core assets Churchill Downs Incorporated (CDI) relies on to generate revenue and maintain its market position as of late 2025. These resources are what make the whole operation tick, from the grandstands to the digital screens.

The Churchill Downs Racetrack and the Kentucky Derby brand equity represents an unparalleled intangible asset. The 151st running of the Kentucky Derby in 2025 generated an all-time record all-sources handle of $349 million for that single day alone. The event also achieved a peak viewership of 21.8 million viewers. The Derby Week celebration, in general, helps bring over $400 million to the local Louisville economy annually. Still, for Q2 2025, Churchill Downs Racetrack revenue was up $4.9 million year-over-year, even with lower Derby Week ticketing revenue compared to the historic 150th running.

The company's physical footprint and regulatory access are secured through an extensive portfolio of gaming licenses and physical casino/HRM properties. Churchill Downs Incorporated proudly oversees 30 industry-leading regional casinos and HRM/racing properties across 14 states. This portfolio is constantly evolving, evidenced by the definitive agreement announced in July 2025 to acquire 90% of Casino Salem in New Hampshire for $180 million.

Here's a quick look at the scale of the physical and licensed assets:

Asset Category	Count/Scope	Key Location/Detail
Total Regional Gaming/HRM Properties	30	Across 14 states
Properties Listed (Example Set)	13	Located in 11 states
Casino Salem Acquisition (New)	90% Equity Interest	$180 million transaction value
Marshall Yards HRM Venue (Projected)	Up to 240 HRMs	Projected investment of $40 to $50 million

The digital wagering arm is powered by the TwinSpires proprietary online wagering technology platform. This platform is cited as the number one most profitable horse race wagering platform in the business. While specific platform metrics aren't always public, its contribution is vital to the Wagering Services and Solutions segment.

On the balance sheet, liquidity is supported by cash and cash equivalents of $182.4 million (Q2 2025). This figure, reported at the end of the second quarter of 2025, provides a cushion for operations and strategic moves. For context, the company also reported returning $250.4 million of capital to shareholders through share repurchases in Q2 2025.

The long-term visibility for the flagship event is locked in via the long-term media rights agreement with NBC Sports. This extension ensures the Kentucky Derby and Kentucky Oaks will continue to be presented on NBC and Peacock through the year 2032. This deal makes NBC the longest-running media home for the event, extending a relationship that began in 2001.

Key aspects of the media rights extension include:

• Coverage secured through the 2032 running of the Kentucky Derby.
• Multiplatform rights include NBC, Peacock, and USA Network.
• The previous deal was set to expire after the 2025 Derby.

Finance: draft 13-week cash view by Friday.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Value Propositions

You're looking at the core value drivers for Churchill Downs Incorporated as of late 2025, based on their Q2 2025 performance. Here's the quick math on what they are delivering to customers and shareholders.

Iconic Entertainment: The spectacle and tradition of the Kentucky Derby

The 151st running of the Kentucky Derby delivered record engagement across media and wagering, cementing its place as a premier annual event. While ticketing revenue dipped slightly, the overall economic impact from the event was substantial.

The value proposition is quantified by these Q2 2025 figures:

• Derby alone betting totaled $234.4 million, an 11% increase year-over-year.
• The full Derby Day card saw $349 million in all-sources handle, a 9% jump from the prior year.
• Derby Week handle reached nearly $474 million.
• Average viewership for the race was 17.7 million viewers, up 6%, peaking at 21.8 million viewers.
• Churchill Downs Racetrack revenue was up $4.9 million year-over-year, driven by wagering and sponsorship.

Still, the track's adjusted profit saw a minor pullback, declining by about $1 million due to higher pari-mutuel taxes and the high comparison base from the 150th running.

Convenient Wagering: Profitable, accessible online horse racing via TwinSpires

The digital wagering arm, including TwinSpires Horse Racing and Exacta's HRM installations, showed growth, particularly around major events. This provides customers with accessible betting channels.

The Wagering Services and Solutions segment delivered:

Metric	Q2 2025 Amount (in millions)	Year-over-Year Change
Revenue	$168.4	Up 5.3%
Adjusted EBITDA	$48.0	Increase of $1.8

TwinSpires Horse Racing revenue specifically increased by $5.1 million, primarily from higher Derby Week wagering. However, this segment's adjusted profit was pulled down by $2.4 million in increased legal and marketing expenses.

Regional Gaming: Localized, modern Historical Racing Machine entertainment venues

The expansion of Historical Racing Machine (HRM) venues, especially in Kentucky and Virginia, is a major value creator, offsetting softness in other gaming areas.

The Live and Historical Racing segment generated $540.9 million in revenue for Q2 2025, marking a 10.3% increase year-over-year. This growth translated directly to profitability:

• Kentucky HRM venues contributed a $15.3 million increase in Adjusted EBITDA.
• Virginia HRM venues contributed a $3.0 million increase in Adjusted EBITDA.

To be fair, the broader Gaming segment revenue fell 3% to $266.3 million, largely because of the cessation of HRM operations in Louisiana.

High-End Hospitality: Premium seating and dining experiences at flagship venues

Value is delivered through premium experiences at the flagship racetrack, though capital allocation priorities are shifting. The company is focused on targeted upgrades rather than massive overhauls for now.

You see this in the capital plans:

• A roughly $20 million project is slated for completion at Churchill Downs before the 2026 Derby.
• A previously proposed roughly $900 million renovation project at the racetrack is currently listed as "TBD" after being paused.

Shareholder Return: New $500 million share repurchase program approved (Q2 2025)

Churchill Downs Incorporated is actively returning capital to shareholders, signaling management's confidence in the business valuation. The Board approved a new authorization in Q2 2025.

The commitment is clear:

• New common stock repurchase program approved on July 22, 2025, for up to $500 million.
• This new program replaces the prior authorization of the same amount from March 2025.
• During Q2 2025, the company already repurchased 2,565,964 shares for a total cost of $250.4 million.

The company ended Q2 2025 with $182.4 million in cash and cash equivalents.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Customer Relationships

You're looking at how Churchill Downs Incorporated structures its interactions with its patrons across racing, gaming, and digital platforms as of late 2025. It's a mix of high-touch service for marquee events and automated efficiency for daily digital engagement.

Dedicated VIP host services for high-net-worth casino and Derby patrons

The focus here is on exclusivity and personalized service, often tied to the highest spenders at the racetrack and within the gaming venues. While specific VIP host staffing numbers aren't public, the financial results from premium experiences show where this relationship investment lands. For instance, the 151st Kentucky Derby, which Churchill Downs Incorporated structures with premium offerings, saw all-sources handle for the race itself hit a record of $234.4 million, up 11% from the prior year. Also, the company's Q2 2025 net revenue hit an all-time record of $934.4 million, partly fueled by these high-value customer interactions.

Automated, self-service digital interface for TwinSpires online wagering

The TwinSpires platform serves a segment that values speed and convenience. The digital relationship is transactional and self-directed. For the Kentucky Derby Day program in Q2 2025, TwinSpires handled $108.0 million in wagering, a 17% increase over the prior year's record. However, this digital segment shows near-term risk; TwinSpires Horse Racing saw its adjusted EBITDA decrease by $2.4 million in Q2 2025 due to higher legal expenses and increased marketing spend related to Derby Week. Still, Q3 2025 saw TwinSpires Horse Racing revenue increase by $5.3 million year-over-year, indicating continued digital engagement.

Loyalty programs for regional gaming and HRM venue customers

Churchill Downs Incorporated uses its five-tier FastTrack Rewards program to create stickiness across its growing network of Historical Racing Machine (HRM) and casino properties in five states. This program directly translates gaming activity into tangible benefits, which is key for customer retention. Here's a snapshot of how points are earned, showing the direct link between spend and relationship status:

Venue Type	Tier Point Earning Rate	Redeemable Point Earning Rate
HRM Machines (Kentucky)	1 point per $5 handle	1 point per $5 handle
HRM Machines (Virginia)	1 point per $5 handle	1 point per $10 handle
Slots (IN, NY, MD)	1 point per $5 coin-in	1 point per $5 coin-in

The Live and Historical Racing segment, which includes these venues, generated $540.9 million in revenue in Q2 2025, up 10.3% year-over-year, showing the scale of the customer base participating in these loyalty structures.

High-touch, curated hospitality for Derby week ticket holders

This relationship is time-bound and experience-driven, centered around the Kentucky Derby and Oaks. While Derby Week ticketing revenue dipped slightly compared to the prior year, the overall engagement metrics soared. The 151st Derby drew an average TV audience of 17.7 million viewers (up 6%) and a peak audience of 21.8 million (up 8%). Furthermore, social media impressions during Derby Week reached over 285,000,000, a 67% increase from 2024. The company is investing in smaller, targeted hospitality upgrades, with roughly $30 million in projects planned for Millionaires Row and other exclusive areas, expected to finish before the 2026 Derby.

Direct engagement through retail sportsbooks and casino floors

This covers the in-person, day-to-day interaction at properties like del Lago Resort & Casino and the various HRM sites. The Gaming segment revenue was $266.3 million in Q2 2025, though it saw a 3% decline, partly due to the cessation of HRM operations in Louisiana. Conversely, the overall Live and Historical Racing segment revenue increased by $50.7 million in Q2 2025, driven by Virginia and Kentucky venues. The company is actively managing this relationship portfolio, evidenced by the Q3 2025 repurchase of 515,527 shares for a total cost of $53.5 million, signaling a commitment to shareholder value which underpins the entire business structure.

Finance: draft 13-week cash view by Friday.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Channels

You're looking at how Churchill Downs Incorporated gets its offerings-from the thunder of hooves to the digital bet slip-into the hands of customers as of late 2025. It's a multi-pronged approach, blending iconic physical locations with growing digital and regional gaming footprints.

Physical Racetracks (e.g., Churchill Downs Racetrack)

The flagship channel remains the physical racetrack, most notably Churchill Downs Racetrack in Louisville, Kentucky. This channel is crucial for major events, driving significant wagering and media exposure.

• Churchill Downs Racetrack conducts live Thoroughbred racing during Spring, September, and Fall Meets.
• The 151st Kentucky Derby in 2025 achieved an all-time record all-sources handle for the Kentucky Derby Race, Kentucky Derby Day Program, and Kentucky Derby Week.
• The 151st Kentucky Derby broadcast drew an average viewership of 17.7 million (up 6% versus the prior year) and a peak viewership of 21.8 million (up 8% versus the prior year).
• Revenue growth at Churchill Downs Racetrack in the second quarter of 2025 was supported by record Spring Meet wagering and growth in Derby Week wagering and licensing/sponsorship revenue.
• Derby Week helps bring over $400 million to the local Louisville economy each year.

Regional Historical Racing Machine (HRM) venues (e.g., Rosie's, The Rose)

This is a major growth channel, heavily weighted toward Historical Racing Machines (HRMs) in states like Virginia and Kentucky. The third quarter of 2025 showed this segment as a primary driver of overall company revenue growth.

The Live and Historical Racing segment saw a significant revenue increase of 21% year-over-year in the third quarter of 2025, with Adjusted EBITDA rising by 25%.

Key revenue contributions to the overall $54.5 million year-over-year net revenue increase in Q3 2025 came directly from these venues:

Channel/Venue Driver	Q3 2025 Revenue Increase (YoY)	Notes
Virginia HRM Venues	$30.1 million increase	Includes $26.0 million net increase from Northern Virginia venues.
Kentucky HRM Venues	$20.9 million increase	Includes a $12.2 million surge from western Kentucky venues.
Casino Salem (NH) Temporary Facility	$2.3 million increase	Contribution from the temporary mini casino facility.

Recent physical channel expansions supporting this include:

• The Rose Gaming Resort in Northern Virginia, which opened in November 2024, has 1,650 HRMs in phase one.
• Owensboro Racing & Gaming opened in Kentucky in the first quarter of 2025 with 600 HRMs.
• Expansion of Rosie's Richmond in Virginia completed on August 6, 2025, adding 450 incremental historical racing machines.
• Roseshire Gaming Parlor opened in Henrico County, Virginia, on September 29, 2025, with 175 historical racing machines.

TwinSpires.com and mobile app for online horse wagering

The digital channel, anchored by TwinSpires.com, captures wagers remotely. This channel saw a positive contribution to revenue in the third quarter of 2025.

• TwinSpires Horse Racing contributed a $5.3 million revenue increase year-over-year in the third quarter of 2025.
• TwinSpires Horse Racing contributed a $0.3 million net increase to Adjusted EBITDA in the third quarter of 2025.
• The company touts TwinSpires as the #1 most profitable horse race wagering platform.

NBC/Peacock for national broadcast and streaming of key events

Media rights and broadcast partnerships serve as a critical channel for reaching national audiences and promoting the core racing product, driving wagering and brand awareness.

• NBC Sports announced it will showcase the Kentucky Oaks on primetime for the first time ever in 2026.
• The 151st Kentucky Derby broadcast in 2025 achieved an average viewership of 17.7 million.

Wholly-owned regional casinos and retail sportsbooks

This channel includes wholly-owned gaming properties, which saw a revenue decrease in Q2 2025 due to the cessation of HRM operations in Louisiana, though other locations provided offsets.

Churchill Downs Incorporated oversees 30 industry-leading regional casinos and HRM/racing properties across 14 states.

The Gaming segment revenue in the third quarter of 2025 was $265.5 million, down from 2024's $270.3 million, a decrease of $4.8 million. This was driven by a $6.1 million loss from the cessation of HRM operations in Louisiana.

The Wagering Services and Solutions segment, which includes sports betting, saw a $0.2 million revenue increase in the third quarter of 2025.

The acquisition of 90% of Casino Salem in New Hampshire was completed on August 27, 2025, for $180 million, adding to the portfolio of wholly-owned assets.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Customer Segments

Churchill Downs Incorporated serves distinct groups across its racing, gaming, and wagering platforms, with financial performance metrics reflecting the scale of these operations as of late 2025.

Horse Racing Enthusiasts: Patrons of live racing and TwinSpires ADW users

This segment includes those engaging with the core racing product, both in-person at Churchill Downs Racetrack and digitally via TwinSpires (part of the Wagering Services and Solutions segment).

• The 151st Kentucky Derby generated an all-sources handle of $349.0 million for the single day in Q2 2025.
• Viewership for the 151st Kentucky Derby reached an average of 17.7 million viewers, an increase of 6% versus the prior year.
• TwinSpires Horse Racing saw revenue increase by $5.1 million in the second quarter of 2025, driven by higher Derby Week wagering.
• In one reported instance, TwinSpires recorded $108.0 million in bets on the Derby Day races.
• For the third quarter of 2025, the Wagering Services and Solutions segment, which includes TwinSpires, recorded revenue of $127.2 million.

Regional Gaming Patrons: Local customers of HRM and casino properties

These patrons frequent the Historical Racing Machine (HRM) venues and wholly-owned regional casino properties, which are major contributors to the Live and Historical Racing segment.

Metric	Q3 2025 Value (Millions USD)	Source Context
Live and Historical Racing Segment Revenue	$305.7	Surged 21% year-over-year
Virginia HRM Venues Revenue Increase	$30.1	Quarter-over-quarter increase
Kentucky HRM Venues Revenue Increase	$20.9	Quarter-over-quarter increase
Gaming Segment Revenue (Q2 2025)	$266.3	Wholly owned regional properties
Terre Haute Casino Resort Revenue Contribution (Q1 2025)	$31.6	Incremental revenue in the first quarter

The growth in this segment is heavily reliant on the performance of newer and expanded HRM locations, such as the opening of Roseshire Gaming Parlor in September 2025 with 175 historical racing machines.

High-Net-Worth Individuals: Buyers of premium Derby tickets and suites

This group targets premium experiences at Churchill Downs Racetrack, though demand dynamics can shift based on economic conditions.

• Adjusted profit for Churchill Downs Racetrack in Q2 2025 declined by about $1 million due to a decrease in ticketing revenue for Derby Week.
• Lower-tier Kentucky Derby tickets in Q1 2025 were noted as being priced at $1,000-plus.
• The company is planning the $280 million-$300 million Victory Run project to replace older seating and dining areas with premium hospitality offerings, including private suites.

Corporate Sponsors: Brands seeking association with the Derby spectacle

These entities invest in the Derby spectacle for brand association, contributing to non-wagering revenue streams at the Racetrack.

Sponsorship and Licensing revenue for the Kentucky Derby grew in 2025. In Q2 2025, Churchill Downs Racetrack revenue was up $4.9 million year-over-year, partially supported by increased licensing and sponsorship revenue.

Retail Sports Bettors: Users of on-site, brick-and-mortar sportsbooks

This customer base interacts with Churchill Downs Incorporated through its retail and online sports betting operations, which fall under Wagering Services and Solutions.

• The sports betting business contributed an Adjusted EBITDA increase of $0.8 million in the third quarter of 2025.
• In Q1 2025, the company noted a slip in sports wagering of more than $1 million.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Cost Structure

You're looking at the major financial drains that keep Churchill Downs Incorporated running, which is a mix of massive capital projects, ongoing operational overhead, and regulatory costs. It's a heavy structure, especially with the current investment cycle.

Capital Investment Commitments

Churchill Downs Incorporated has significant capital expenditures tied up in its multi-year enhancement projects at the flagship racetrack. While the initial projection mentioned in your outline was $200-$240 million for 2025, management provided a broader forecast. The total projected capital expenditure for 2025 was set between $350 million and $400 million. A portion of this, specifically for the major racetrack renovations like The Skye Project, Conservatory Project, and Infield General Admission Project, was anticipated to be between $120 million and $130 million in 2025 alone, with completion targeted by the 154th Kentucky Derby in May 2028.

The key components of this capital outlay include:

• The Skye Terrace Renovation and Expansion Project: budgeted at $455 million to $465 million across multiple years.
• The Conservatory Project: budgeted at $320 million to $330 million across multiple years.
• Infrastructure improvements, including a new tunnel to the infield.

Debt Servicing Costs

The balance sheet carries substantial leverage, which translates directly into interest expense. As of the end of the third quarter of 2025, Churchill Downs Incorporated's long-term debt, net of current maturities and loan origination fees, stood at $1,963.2 million. This is definitely close to the $1.9 billion mark you noted. For context, the total interest expense, net, for the second quarter of 2025 was reported as ($74.2 million).

Here is a snapshot of the debt profile as of September 30, 2025, compared to the prior year-end:

Liability Component (in millions)	As of September 30, 2025	As of December 31, 2024
Long-term debt, net	$1,963.2	$1,767.9
Notes payable, net	$3,079.9	$3,076.2

Venue Operations and Personnel Costs

Operating costs are high because Churchill Downs Incorporated manages multiple physical venues across its segments, including racetracks, casinos, and HRM (Historical Racing Machine) locations. Total operating expense for the nine months ended September 30, 2025, reached $1,114.7 million. Employee compensation is a major component of this overhead. While some quarters show lower compensation expense, such as a $1.1 million decrease impacting Q1 2025 Adjusted EBITDA, the overall trend reflects a growing operational footprint, with Q1 2025 administrative costs, including corporate compensation and overhead, rising by $1 million year-over-year.

Marketing, Legal, and Regulatory Outlays

The TwinSpires Horse Racing segment faces specific, often volatile, cost pressures from legal battles and promotional spending. For instance, in the second quarter of 2025, the segment saw a $2.4 million decrease in Adjusted EBITDA, which was attributed to increased legal expenses and higher marketing spend related to Derby Week. Similarly, in the first quarter of 2025, increased legal expenses caused a $1.0 million decrease in Adjusted EBITDA for TwinSpires.

Regulatory and tax costs are also material. The structure of horse racing regulation means costs are passed through to operators. For example, a recommended tax structure included a 1.5 per cent tax rate on all pari-mutuel bets, including online wagering. Furthermore, Churchill Downs Incorporated has been involved in litigation regarding fees imposed by the Horseracing Integrity and Safety Authority (HISA), where the company argued that the fee assessment method, which included a percentage of race purses, was illegal; at one point, the lawsuit noted Churchill Downs owed almost $2.0 million in unpaid fees.

These costs can be broken down by segment impact:

• TwinSpires Horse Racing: Experienced negative EBITDA impact from increased legal expenses in Q1 2025 and Q2 2025.
• Gaming Segment: Experienced a revenue decline in Q2 2025 partly due to the closure of HRM operations in Louisiana, which was tied to regional regulatory changes.
• Regulatory Fees: Litigation has centered on HISA fees, which were assessed based on a percentage of race purses.

Finance: review the Q4 2025 operating expense forecast against the $1.96 billion debt load by next Tuesday.

Churchill Downs Incorporated (CHDN) - Canvas Business Model: Revenue Streams

Churchill Downs Incorporated's revenue streams in late 2025 are anchored by its diversified portfolio across live racing, historical racing, regional gaming, and online wagering platforms.

The Live and Historical Racing revenue segment was the largest contributor, posting $540.9 million in revenue for the second quarter of 2025. This represented a 10.3% increase year-over-year, driven by growth in Historical Racing Machine (HRM) venues in Kentucky and Virginia, including the impact of The Rose facility which opened in Northern Virginia in November 2024.

Gaming revenue from wholly-owned regional casinos was $266.3 million in Q2 2025. This figure reflected a 3% revenue decline, partially due to the cessation of HRM operations in Louisiana and lower contributions from some of the nine other wholly-owned gaming properties.

Online wagering revenue from the TwinSpires platform, categorized under Wagering Services and Solutions, reached $168.4 million in Q2 2025. This segment saw a 5.3% increase, benefiting from record wagering on Derby Week.

The following table summarizes the external customer revenue breakdown for the reportable segments in Q2 2025:

Revenue Stream Category	Q2 2025 Revenue (in millions)	Year-over-Year Change
Live and Historical Racing Revenue	$540.9	Up 10.3%
Gaming Revenue	$266.3	Down 3%
Wagering Services Revenue (including TwinSpires)	$168.4	Up 5.3%

The Kentucky Derby ticketing, licensing, and sponsorship fees are concentrated within the Churchill Downs Racetrack operations. While overall Churchill Downs Racetrack revenue was up $4.9 million year-over-year, this was achieved despite lower ticketing revenue compared to the prior year's historic 150th running. The 151st Kentucky Derby itself generated an all-time record $349 million in all-sources handle for the single race day. Wagering growth across Derby Week was significant, with Derby Day wagering increasing 9% over the previous record.

Food, beverage, and hospitality sales at physical venues are integrated within the segment results, particularly the Live and Historical Racing segment. Specific figures for food, beverage, and hospitality sales separate from ticketing and HRM revenue are not itemized in the Q2 2025 segment disclosures, but the overall strength of the Racetrack is noted:

• Derby Week ticketing revenue was lower than the previous year.
• Growth in wagering and sponsorship revenue offset the ticketing dip at the Racetrack.
• The 151st Derby drew roughly 147,000 fans despite rainy conditions.
• The company sees future growth potential in ticketing, broadcast rights, and sponsorships.