Churchill Downs Incorporated

Churchill Downs is refinancing its balance sheet through a proposed $500 million senior secured Term Loan B due 2033 and related debt actions. The move comes as the company's share price has fallen 11.3% over the past 30 days and 28.1% year to date, with a 1 year total shareholder return down 17.6%. Churchill Downs also plans a strategic review and potential sale of nine regional gaming properties, aiming to recycle capital into higher return projects at Churchill Downs Racetrack, core HRM assets, and share repurchases. Under the most followed analyst view, the stock is seen as 39% undervalued, with a fair value of $130.83 per share against a last close of $80.46. Risks to that narrative include weaker performance from regional casinos or slower HRM venue expansion.

Churchill Downs reported second-quarter revenue of $980 million, up 4.9% year over year, in line with analyst expectations. The company also narrowly beat EBITDA estimates. Among the six gaming solutions stocks tracked, Rush Street Interactive posted the strongest results with revenue up 46.3% to $393.8 million, while PlayStudios was the weakest with revenue down 7.3% to $54.99 million. DraftKings revenue fell 4.6% to $1.44 billion, missing estimates, and Accel Entertainment revenue rose 9.6% to $368.1 million, beating expectations. Shares of the group have fallen an average of 6.2% since reporting.

Churchill Downs could be 38% undervalued according to a Simply Wall St analysis, which estimates fair value at $134.75 per share versus a last close of $83.47. The company and The New York Racing Association recently outlined the new Thoroughbred Championship Series, a six-race, season-long competition for three-year-old Thoroughbreds starting in 2027. The bullish narrative is driven by expansion of high-margin Historical Racing Machine properties in Kentucky and Virginia, along with new projects in New Hampshire and potential new markets, which are expected to increase exposure to experiential gaming and drive recurring revenue and margin growth. Churchill Downs has also announced new capital projects at its flagship racetrack and plans to sell nine regional casinos, yet the stock has declined 25.44% year to date and posted a one-year total shareholder return of negative 18.99%. Key risks include regulatory disputes such as the HISA fee fight and any shift in consumer interest away from horse racing.

Churchill Downs reported record second-quarter revenue of $980 million and record adjusted EBITDA of $477 million, marking its sixth consecutive record second quarter for both measures. The results were driven by the 152nd Kentucky Derby, growth at historical racing machine properties, and continued expansion in wagering services. The company is also conducting a strategic review of nine wholly owned regional gaming properties and is exploring sales of those assets individually or in small groups, with potential proceeds aimed at reducing leverage, reinvesting in core operations, and repurchasing shares. Churchill Downs generated record first-half free cash flow of $474 million and plans continued investment in its $285 million Victory Run racetrack project, the Rockingham Grand Casino, and share buybacks while maintaining leverage near 3.6 to 3.8 times.

Churchill Downs Incorporated has signed a definitive agreement to acquire the 49% stake in United Tote Company that it sold to NYRA Content Management Solutions in April 2024. The transaction will return full ownership of United Tote to CDI, and NYRA has concurrently agreed to extend its tote services agreement with United Tote through 2035. United Tote provides pari-mutuel wagering systems for racetracks, off-track betting facilities, and other operators. The deal supports CDI's strategy to vertically integrate key wagering technologies and strengthen its position as a B2B distributor of horse racing content. The transaction is expected to close by August 5, 2026.

Churchill Downs Incorporated announced updates on three capital projects at Churchill Downs Racetrack, with completion expected in 2027 and 2028. The Victory Run project, a new four-story premium hospitality structure on the first turn, began construction after the 152nd Kentucky Derby and is slated for completion ahead of the 154th Kentucky Derby in 2028, while temporary covered seating will be offered for the 153rd Kentucky Derby in 2027. The Homestretch Club expansion, adding VIP seating and enhanced food and beverage infrastructure, is expected to be completed by the 153rd Kentucky Derby in 2027. The Infield Seating Upgrade will add 1,400 temporary seats and test a new cabana offering with 500 covered reserved seats along the turf course, along with underground infrastructure improvements for a sponsored music stage and new bar and lounge concepts, also by the 153rd Kentucky Derby in 2027.

Churchill Downs shares climbed 8.3% after the company reported first-quarter results that beat analyst estimates and announced a renewed seven-year media rights agreement with NBC. Revenue grew, adjusted EBITDA margins widened, and earnings per share topped forecasts, supported by expansion projects and ongoing debt reduction. The NBC deal includes expanded prime-time coverage, reinforcing the media and sponsorship pillar behind Kentucky Derby-related growth. The strong quarter and renewed rights deal shift the investment narrative, though concerns remain about weaker free cash flow margins and below-sector revenue growth over the past two years.

Churchill Downs Incorporated reported first quarter 2026 earnings per share of $1.21, beating estimates by 20%. Revenue reached $663 million, up 3.2%, with adjusted EBITDA of $257 million and margins of 38.8%. The company, which operates the Kentucky Derby, HRM gaming venues, and the TwinSpires platform, generated $2.9 billion in trailing revenue. Growth is driven by HRM expansion and Derby-related upside, including a 2026 NBC renewal and sponsorship gains expected to add $15 to $20 million in EBITDA. The annual dividend is $0.44 per share, yielding 0.52%, with a payout ratio of 8.15% and 15 consecutive years of increases.