Churchill Downs IncCHDN
Churchill Downs Inc Segments Disclosure
21. SEGMENT INFORMATION
We manage our operations through three reportable segments: Live and Historical Racing, Wagering Services and Solutions, and Gaming. Our operating segments reflect the internal management reporting used by our chief operating decision maker, Chief Executive Officer, to evaluate results of operations and to assess performance and allocate resources.
•Live and Historical Racing
The Live and Historical Racing segment includes live and historical pari-mutuel racing related revenue and expenses at Churchill Downs Racetrack and our historical racing properties in Kentucky, Virginia, and New Hampshire.
Our Live and Historical Racing properties earn commissions primarily from pari-mutuel wagering on live and historical races; simulcast fees earned from other wagering sites, fees from racing event-related services including admissions, personal seat licenses, sponsorships, television rights, and other miscellaneous services, and revenue from food and beverage services.
•Wagering Services and Solutions
The Wagering Services and Solutions segment includes the revenue and expenses for TwinSpires Horse Racing, our sports betting business, United Tote, and Exacta.
TwinSpires Horse Racing operates the online horse racing wagering business for TwinSpires.com, BetAmerica.com, and other white-label platforms; facilitates high dollar wagering by international customers; and provides the Bloodstock Research Information Services platform for horse racing statistical data.
Our sports betting business includes the results of our retail sportsbooks at our wholly owned gaming properties, our retail sportsbooks in Kentucky, and our monetized online sports wagering licenses in Pennsylvania and Kentucky. The retail and online sportsbooks, if applicable, related to Rivers Des Plaines and MVG are included in the Gaming segment.
United Tote manufactures and operates pari-mutuel wagering systems for racetracks, OTBs and other pari-mutuel wagering businesses. United Tote provides totalisator services which accumulate wagers, calculate payoffs and displays wagering data to patrons who wager on horse races. United Tote has contracts to provide totalisator services to third-party racetracks, OTBs and other pari-mutuel wagering businesses and also provides these services at our facilities.
Exacta is a leading provider of central determinant system technology in HRMs across the country. Exacta's system architecture supports multiple game vendors and virtually unlimited math modeling capabilities on a single system enabling Exacta to deliver a diverse gaming library to Company owned and third-party HRM entertainment venues in several states.
•Gaming
The Gaming segment includes revenue and expenses for the wholly owned casino properties and associated racetrack facilities. The Gaming segment also includes our share of our equity investments in Illinois and Ohio.
The Gaming segment generates revenue and expenses from slot machines, table games, VLTs, video poker, HRMs, ancillary food and beverage services, hotel services, commission on pari-mutuel wagering, racing event-related services, and other miscellaneous operations.
On June 26, 2023, the Company's management agreement for Lady Luck expired and was not renewed. The Company completed the sale of substantially all its assets at Lady Luck for an immaterial amount.
We have aggregated Arlington as well as certain corporate operations, and other immaterial joint ventures in All Other to reconcile to consolidated results.
Eliminations include the elimination of intersegment transactions. We utilize non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy and allocate resources. Adjusted EBITDA includes the following adjustments:
Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to noncontrolling interests.
Adjusted EBITDA excludes:
•Transaction expense, net which includes:
–Acquisition, disposition, and property sale related charges; and
–Other transaction expense, including legal, accounting, and other deal-related expense;
•Stock-based compensation expense;
•Rivers Des Plaines' impact on our investments in unconsolidated affiliates from legal reserves and transaction costs;
•Asset impairments, net;
•Gain on property sales;
•Legal reserves;
•Pre-opening expense; and
•Other charges, recoveries, and expenses
The property associated with Arlington International Racecourse ("Arlington") was sold on February 15, 2023 to the Chicago Bears. Arlington's results and exit costs in 2023 are treated as an adjustment.
The tables below present net revenue from external customers, intercompany revenue from each of our segments, Adjusted EBITDA by segment, and reconciliation of net income to Adjusted EBITDA. Refer to Note 12, Revenue from Contracts with Customers to see intercompany revenues by segment.
Net revenue from external customers by segment is comprised of the following:
| Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Live and Historical Racing | $ | 1,394.7 | $ | 1,225.6 | $ | 1,047.3 | |||||||||||
| Wagering Services and Solutions | 488.2 | 469.5 | 444.9 | ||||||||||||||
| Gaming | 1,042.9 | 1,039.1 | 968.6 | ||||||||||||||
| All Other | 0.1 | 0.1 | 0.9 | ||||||||||||||
| Net Revenue | $ | 2,925.9 | $ | 2,734.3 | $ | 2,461.7 | |||||||||||
Adjusted EBITDA by segment is comprised of the following:
| Year Ended December 31, 2025 | |||||||||||||||||
| (in millions) | Live and Historical Racing | Wagering Services and Solutions | Gaming | ||||||||||||||
| Revenue | $ | 1,442.4 | $ | 526.3 | $ | 1,049.3 | |||||||||||
| Pari-mutuel taxes and purses | (349.4) | (22.0) | (36.2) | ||||||||||||||
| Gaming taxes | (7.5) | (2.3) | (308.7) | ||||||||||||||
| Marketing and advertising | (56.8) | (9.6) | (35.0) | ||||||||||||||
| Salaries and benefits | (142.9) | (34.9) | (170.4) | ||||||||||||||
| Content expense | (6.3) | (210.2) | (8.6) | ||||||||||||||
| Selling, general and administrative expense | (43.2) | (18.1) | (44.4) | ||||||||||||||
| Maintenance, insurance and utilities | (44.4) | (4.1) | (39.6) | ||||||||||||||
| Gaming equipment rental and technology costs | (51.6) | (3.1) | (17.4) | ||||||||||||||
| Food and beverage costs | (15.0) | — | (16.4) | ||||||||||||||
Other operating expense(1) | (92.3) | (45.3) | (68.3) | ||||||||||||||
| Equity in income of unconsolidated affiliates | — | — | 178.1 | ||||||||||||||
| Other income | 4.0 | 0.6 | 0.6 | ||||||||||||||
| Adjusted EBITDA | $ | 637.0 | $ | 177.3 | $ | 483.0 | |||||||||||
| Year Ended December 31, 2024 | |||||||||||||||||
| (in millions) | Live and Historical Racing | Wagering Services and Solutions | Gaming | ||||||||||||||
| Revenue | $ | 1,267.0 | $ | 500.7 | $ | 1,045.4 | |||||||||||
| Pari-mutuel taxes and purses | (300.0) | (19.7) | (43.5) | ||||||||||||||
| Gaming taxes | (5.7) | (2.4) | (291.6) | ||||||||||||||
| Marketing and advertising | (42.1) | (8.9) | (35.4) | ||||||||||||||
| Salaries and benefits | (127.0) | (32.8) | (164.6) | ||||||||||||||
| Content expense | (6.4) | (205.8) | (8.5) | ||||||||||||||
| Selling, general and administrative expense | (40.1) | (15.5) | (46.1) | ||||||||||||||
| Maintenance, insurance and utilities | (46.5) | (4.2) | (42.1) | ||||||||||||||
| Gaming equipment rental and technology costs | (41.6) | (3.5) | (15.4) | ||||||||||||||
| Food and beverage costs | (12.9) | — | (16.7) | ||||||||||||||
Other operating expense(1) | (70.6) | (42.6) | (62.9) | ||||||||||||||
| Equity in income of unconsolidated affiliates | — | — | 186.4 | ||||||||||||||
| Other income | 0.5 | 0.3 | 1.9 | ||||||||||||||
| Adjusted EBITDA | $ | 574.6 | $ | 165.6 | $ | 506.9 | |||||||||||
| Year Ended December 31, 2023 | |||||||||||||||||
| (in millions) | Live and Historical Racing | Wagering Services and Solutions | Gaming | ||||||||||||||
| Revenue | $ | 1,084.6 | $ | 458.4 | $ | 974.6 | |||||||||||
| Pari-mutuel taxes and purses | (262.5) | (19.9) | (39.2) | ||||||||||||||
| Gaming taxes | (5.2) | (2.7) | (283.6) | ||||||||||||||
| Marketing and advertising | (37.6) | (9.8) | (35.4) | ||||||||||||||
| Salaries and benefits | (107.0) | (29.3) | (146.0) | ||||||||||||||
| Content expense | (6.5) | (205.1) | (8.8) | ||||||||||||||
| Selling, general and administrative expense | (31.9) | (12.4) | (42.7) | ||||||||||||||
| Maintenance, insurance and utilities | (43.2) | (3.8) | (40.0) | ||||||||||||||
| Gaming equipment rental and technology costs | (48.7) | (3.7) | (15.6) | ||||||||||||||
| Food and beverage costs | (11.3) | — | (14.9) | ||||||||||||||
Other operating expense(1) | (56.6) | (40.6) | (53.2) | ||||||||||||||
| Equity in income of unconsolidated affiliates | — | — | 191.6 | ||||||||||||||
| Other income | 1.3 | 1.0 | 1.8 | ||||||||||||||
| Adjusted EBITDA | $ | 475.4 | $ | 132.1 | $ | 488.6 | |||||||||||
(1) Other operating expense primarily includes supplies, regulatory licenses and fees, property taxes, and third-party service fees and costs.
| Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Reconciliation of Net Income to Adjusted EBITDA: | |||||||||||||||||
| Net income attributable to Churchill Downs Incorporated | $ | 383.0 | $ | 426.8 | $ | 417.3 | |||||||||||
| Net income attributable to noncontrolling interests | 2.5 | 2.3 | — | ||||||||||||||
| Net income | 385.5 | 429.1 | 417.3 | ||||||||||||||
| Adjustments: | |||||||||||||||||
| Depreciation and amortization | 233.1 | 199.1 | 169.0 | ||||||||||||||
| Interest expense | 297.7 | 289.8 | 268.4 | ||||||||||||||
| Income tax provision | 146.9 | 144.1 | 144.5 | ||||||||||||||
| Stock-based compensation expense | 30.2 | 36.1 | 32.9 | ||||||||||||||
| Legal reserves | — | — | (1.2) | ||||||||||||||
| Pre-opening expenses | 11.7 | 29.6 | 18.6 | ||||||||||||||
| Arlington exit costs | — | — | 9.4 | ||||||||||||||
| Other expense, net | 10.1 | 4.2 | 7.0 | ||||||||||||||
| Transaction expense (benefit), net | 5.1 | (12.1) | 4.8 | ||||||||||||||
| Asset impairments, net | 47.5 | 3.9 | 24.6 | ||||||||||||||
| Other income, expense: | |||||||||||||||||
| Interest, depreciation and amortization expense related to equity investments | 38.6 | 42.0 | 40.2 | ||||||||||||||
| Rivers Des Plaines' legal reserves and transactions costs | — | 0.3 | — | ||||||||||||||
| Other charges and recoveries, net | (1.1) | (6.9) | 2.4 | ||||||||||||||
| Gain on sale of assets | — | — | (114.0) | ||||||||||||||
| Total adjustments | 819.8 | 730.1 | 606.6 | ||||||||||||||
| Adjusted EBITDA | $ | 1,205.3 | $ | 1,159.2 | $ | 1,023.9 | |||||||||||
| Adjusted EBITDA by segment: | |||||||||||||||||
| Live and Historical Racing | $ | 637.0 | $ | 574.6 | $ | 475.4 | |||||||||||
| Wagering Services and Solutions | 177.3 | 165.6 | 132.1 | ||||||||||||||
| Gaming | 483.0 | 506.9 | 488.6 | ||||||||||||||
| Total segment Adjusted EBITDA | 1,297.3 | 1,247.1 | 1,096.1 | ||||||||||||||
| All Other | (92.0) | (87.9) | (72.2) | ||||||||||||||
| Total Adjusted EBITDA | $ | 1,205.3 | $ | 1,159.2 | $ | 1,023.9 | |||||||||||
The table below presents total capital expenditures for each of our segments:
| Years Ended December 31, | |||||||||||||||||
| (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Capital expenditures: | |||||||||||||||||
| Live and Historical Racing | $ | 216.9 | $ | 385.4 | $ | 461.1 | |||||||||||
| Wagering Services and Solutions | 22.7 | 19.0 | 14.6 | ||||||||||||||
| Gaming | 29.9 | 130.0 | 188.1 | ||||||||||||||
| Total segment capital expenditures | 269.5 | 534.4 | 663.8 | ||||||||||||||
| All Other | 5.4 | 12.6 | 12.7 | ||||||||||||||
| Total capital expenditures | $ | 274.9 | $ | 547.0 | $ | 676.5 | |||||||||||
Our chief operating decision maker does not review disaggregated assets by segment. The measure of segment assets is reported on the balance sheet as total consolidated assets.
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About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.