Financial Data and Key Metrics Changes - The company achieved record net revenue and record adjusted EBITDA for Q3 2025, with the live and historical racing segment also reaching record levels [5][21] - The live and historical racing segment grew revenue by 21% and adjusted EBITDA by 25% compared to the prior year quarter, marking the 21st consecutive quarter of record growth for this segment [21][24] - Free cash flow generated was $166 million, or $2.34 per share, representing a 13% increase from the prior year quarter [25][27] Business Line Data and Key Metrics Changes - The wagering services and solutions segment delivered record adjusted EBITDA driven by the growth of the Exacta business [24] - The regional gaming properties performed well, with adjusted EBITDA increasing over $3 million, and margins up 1.1 points compared to the prior year quarter [24] - Virginia's HRM properties generated a combined 51% margin during the quarter, which is considered best in class [23] Market Data and Key Metrics Changes - The company is expanding its HRM operations in Kentucky and Virginia, with significant growth in customer databases and gaming revenues [14][15] - The Rose venue in Virginia showed meaningful growth in gaming revenues, with increased visitation frequency [15][22] - The company completed the acquisition of a 90% interest in the Casino Salem project in New Hampshire, which is expected to enhance its market presence [16] Company Strategy and Development Direction - The company outlined five key growth catalysts for the Kentucky Derby, including ticketing revenue, broadcast rights, wagering, sponsorships, and selective renovations [6][11] - A significant investment of $280 to $300 million is planned for the construction of a new venue called Victory Run, aimed at enhancing customer experience [12][13] - The company is focused on maintaining a disciplined capital management strategy while balancing share repurchases and project investments [39][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the Kentucky Derby and HRM properties, citing strong customer engagement and market expansion [19][27] - The company anticipates continued improvement in margins and performance as it drives awareness and customer engagement in its venues [58] - Management acknowledged the challenges posed by illegal gaming machines in Virginia but noted that enforcement has been strong and is not currently a major concern [70] Other Important Information - The Board of Directors approved a 7% increase in dividends, marking the 15th consecutive year of increased dividends per share [26] - The company expects to benefit from favorable cash taxes due to recent federal tax revisions, estimating a reduction in cash tax payments of $50 to $60 million in both 2025 and 2026 [27] Q&A Session Summary Question: ROI targets for Victory Run - The company targets a 20% unlevered IRR focused on year three, emphasizing the time needed to introduce new assets and generate word of mouth [32] Question: Prospective opportunity for ETGs - Management highlighted that electronic table games represent an important opportunity, but emphasized the need for regulatory approval [35][36] Question: Capital allocation and leverage - The company is committed to reducing leverage below 4 times next year while balancing share repurchases and capital investments [39] Question: Benefits of owning properties outright - Owning real estate provides stability and predictability, which management believes is not fully recognized in the market [41][42] Question: M&A environment - Management noted a recent pickup in M&A activity and expressed interest in being opportunistic in acquisitions [44][46] Question: Illegal machines in Virginia - Management acknowledged ongoing enforcement issues but stated that they do not currently pose a significant concern for business operations [70]