Financial Data and Key Metrics Changes - The company achieved record net revenue and record adjusted EBITDA for the third quarter of 2025, with the live and historical racing segment also reaching record levels [5][22] - 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 [22] - Free cash flow generated was $166 million, or $2.34 per share, representing a 13% increase from the prior year quarter [25][26] Business Line Data and Key Metrics Changes - 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 [25] - The Rose gaming venue in Virginia showed significant growth, with gaming revenues increasing and a strong customer database being built [14][15] - The Exacta business benefited from the growth of HRM operations in Kentucky and Virginia, contributing to record adjusted EBITDA for the Wagering Services and Solutions segment [24] Market Data and Key Metrics Changes - The company is expanding its international reach with the addition of three new points races in Dubai and Saudi Arabia, enhancing the quality of the international pathway to the Kentucky Derby [10] - Virginia has proven to be a strong investment environment, with 4,875 HRMs deployed and continued growth in gaming revenue [15][16] Company Strategy and Development Direction - The company is focused on five key growth catalysts for the Kentucky Derby, including ticketing revenue, broadcast rights, wagering, sponsorships, and selective renovations [7][11] - A significant investment of $280 to $300 million is planned for the construction of a new venue called Victory Run, aimed at enhancing the guest experience during Derby Week [12][13] - The company is committed to maintaining a disciplined capital management strategy while balancing share repurchases and project investments [27][40] 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 [20][22] - The company anticipates continued improvement in margins and performance as it drives better awareness and customer engagement in its venues [61] - Management acknowledged the challenges posed by illegal gaming machines in Virginia but noted strong enforcement and progress in addressing these issues [70][72] Other Important Information - The Board of Directors approved a 7% increase in dividends, marking the 15th consecutive year of increased dividends per share [27] - The company expects to spend $200 to $240 million on project capital in 2025, with a focus on strategic investments in its flagship assets [26][28] Q&A Session Summary Question: ROI targets for Victory Run - The company targets a 20% unlevered IRR focused on year three for the Victory Run project [32] Question: Prospective opportunity for ETGs - Management sees electronic table games as an important opportunity but is cautious about predictions due to regulatory factors [36][37] Question: Capital allocation and leverage - The company is committed to reducing leverage below 4 times next year while balancing share repurchases and capital investments [40] Question: Benefits of owning properties outright - Owning real estate provides stability and predictability, which management believes is not fully recognized in the market [42][43] Question: M&A environment - There has been a recent pickup in M&A activity, and the company remains flexible in its approach to acquisitions [46][48] Question: Emerging landscape of prediction markets - The company plans to approach prediction market operators to explain the legal framework governing horse racing wagering [66][67] Question: Illegal machines in Virginia - Management reported strong enforcement against illegal machines and believes the situation is under control [70][72]

Financial Data and Key Metrics Changes - The company reported record net revenue and record adjusted EBITDA for the third quarter of 2025, with the live and historical racing segment also achieving record net revenue and adjusted EBITDA, growing revenue by 21% and adjusted EBITDA by 25% compared to the prior year quarter [5][22][20] - Free cash flow generated was $166 million, or $2.34 per share, representing a 13% increase from the prior year quarter [25][26] - The bank covenant net leverage was reported at 4.1x, with expectations to remain at this level by year-end and drop below 4x in 2026 [28] Business Line Data and Key Metrics Changes - The live and historical racing segment achieved its 21st consecutive quarter of record growth in revenue and adjusted EBITDA [22] - 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 [25] - The Exacta business saw growth driven by the expansion of HRM operations in Kentucky and Virginia, as well as third-party relationships [18][24] Market Data and Key Metrics Changes - The company is expanding its HRM entertainment venues, with the eighth venue set to open in Calvert City in Q1 2026, and significant growth in Virginia's gaming revenues [14][15] - The Rose venue in Virginia showed strong growth, with gaming revenues increasing and a strong customer database being built [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 [7][9][11] - A significant investment of $280 million-$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 allocation strategy while balancing share repurchases and project investments [40][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the Kentucky Derby and HRM properties, citing strong customer engagement and market expansion [20][22] - The company is optimistic about the future of electronic table games (ETGs) as a growth opportunity, although regulatory approvals are still pending [36][37] - Management noted that the current economic environment, including government shutdown discussions, has not significantly impacted operations [60] Other Important Information - The Board of Directors approved a 7% increase in dividends, marking the 15th consecutive year of increased dividends per share [27] - The company anticipates a favorable impact on free cash flow due to recent tax revisions, estimating a reduction in cash tax payments of $50 million-$60 million in both 2025 and 2026 [28] Q&A Session Summary Question: ROI targets for Victory Run - The company targets a 20% unlevered IRR focused on year three for the Victory Run project [32] Question: Prospective opportunity for ETGs - Management acknowledged the importance of ETGs and is focused on regulatory approval, viewing it as a significant opportunity [36][37] Question: Capital allocation strategy - The company is committed to reducing leverage below 4x next year while balancing share repurchases and capital investments [40] Question: Benefits of owning properties outright - Owning real estate provides stability and predictability, which management believes is not fully recognized in the market [42][43] Question: M&A environment - Management noted a recent pickup in M&A activity and remains flexible in pursuing opportunities [46][48] Question: The Rose's margin ramp and government shutdown impact - Management is optimistic about The Rose's growth and does not foresee significant impact from the government shutdown discussions [60] Question: Illegal gaming machines in Virginia - Management reported strong enforcement against illegal machines and believes it has not materially affected their business [70][72]

Financial Data and Key Metrics Changes - The company achieved record net revenue and record adjusted EBITDA in Q3 2025, with the Live and Historical Racing segment also reporting record figures [8][28] - The Live and Historical Racing segment grew revenue by 21% and adjusted EBITDA by 25% compared to the prior year quarter, marking the twenty-first consecutive quarter of record growth [29] - Free cash flow generated was $166 million or $2.34 per share, up 13% from the prior year quarter, with a free cash flow yield of approximately 10% [33][34] Business Line Data and Key Metrics Changes - The Wagering Services and Solutions segment delivered record adjusted EBITDA driven by the growth of the Xacta business, benefiting from Kentucky and Virginia properties [32] - Regional gaming properties performed well, with adjusted EBITDA for wholly owned gaming properties increasing over $3 million, excluding the impact of removing HRMs from Louisiana operations [32] Market Data and Key Metrics Changes - The company is expanding its HRM operations in Kentucky and Virginia, with significant growth in gross gaming revenues and customer databases [19][20] - The Virginia market showed strong performance, with GGR per unit per day increasing every month of Q3 2025 [30] Company Strategy and Development Direction - The company plans to invest $280 million to $300 million in a new structure called Victory Run, aimed at enhancing the guest experience during Derby Week [15] - Five key growth catalysts for the Kentucky Derby were identified: ticketing revenue, broadcast rates, wagering, sponsorships, and selective renovations [10][14][16] 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, emphasizing the importance of strategic investments [26][37] - The company is focused on maintaining a disciplined capital allocation strategy while aiming to reduce leverage below four times by 2026 [35][36] Other Important Information - The company announced a 7% increase in dividends, marking the fifteenth consecutive year of increased dividends per share [35] - The federal tax bill signed on July 4 is expected to improve free cash flow through lower cash tax payments [36] Q&A Session Summary Question: ROI targets for Victory Run - The company targets a 20% unlevered IRR, focusing on achieving this within three years [41] Question: Prospective opportunity for ETGs - Management acknowledged the importance of electronic table games as a growth opportunity but noted the need for regulatory progress [45][47] Question: Capital allocation strategy - The company is committed to balancing share repurchases with capital investments, aiming to reduce leverage while maintaining strategic growth [50][51] Question: Benefits of owning properties outright - Owning real estate provides stability and predictability, which management believes is not fully recognized in the market [53][54] Question: M&A environment - There has been a recent pickup in M&A activity, and the company remains opportunistic in both acquisitions and sales [57][59] Question: Virginia illegal machines enforcement - Management reported strong enforcement against illegal machines but acknowledged ongoing challenges, stating it has not significantly impacted business [90][92]

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]

Financial Data and Key Metrics Changes - The company reported record first quarter net revenue of $643 million and adjusted EBITDA of $245 million, reflecting strong performance despite various challenges [11][12] - The live and historical racing segment increased revenue by nearly $28 million or 11% compared to the prior year quarter [40] - The company generated $234 million or $3.15 per share of free cash flow in the first quarter [47] Business Line Data and Key Metrics Changes - The live and historical racing segment delivered record first quarter revenue and adjusted EBITDA, primarily due to the opening of new venues [39][40] - The Kentucky HRM properties increased adjusted EBITDA by $3.1 million or 6% compared to the prior year quarter [41] - The Virginia HRM properties saw a decrease in adjusted EBITDA by $2.2 million or 3% compared to the prior year quarter, impacted by weather and competition [41][43] Market Data and Key Metrics Changes - The Northern Virginia HRM venues collectively contributed nearly $10 million of adjusted EBITDA during the first quarter, up nearly $4 million from the prior year quarter [41] - The company experienced meaningful sequential growth in gross gaming revenues each month of the first quarter [26] - The Terre Haute Casino Resort in Indiana delivered nearly $12 million of adjusted EBITDA in the first quarter, performing well compared to regional gaming properties [46] Company Strategy and Development Direction - The company is committed to growing the Kentucky Derby through prudent timing of capital investments, pausing a $900 million multiyear project to reassess economic conditions [16][17] - Smaller projects at Churchill Downs Racetrack, costing approximately $25 to $30 million, are expected to deliver strong shareholder returns [19][20] - The company plans to implement electronic table games in existing HRM locations by the end of 2025, focusing on regulatory and taxation challenges [34][78] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased economic uncertainty and inflation risks due to tariffs, impacting cost assessments for projects [16][17] - The leadership team expressed confidence in navigating economic cycles and maintaining growth through strategic investments [37][51] - Management remains optimistic about the upcoming Kentucky Derby, expecting results comparable to last year's record performance [35][131] Other Important Information - The company has reduced its 2025 maintenance capital projection by $10 million to $90 to $100 million [48] - A new common stock repurchase program of up to $500 million was approved, with nearly 800,000 shares repurchased in the first quarter [49][50] - The bank covenant net leverage was 4.0 times at the end of the first quarter, expected to remain stable throughout the year [50] Q&A Session Summary Question: About softness in the quarter and its acceleration - Management noted hesitancy in the lower-tiered play due to macroeconomic volatility, but consistent performance in higher-tiered segments [56][58] Question: Impact on international visitation for Derby 151 - No material change in international visitation was observed, with expectations for strong attendance [62][64] Question: Long-term growth for the Derby and capital plans - Management indicated that the NBC contract will enhance growth, with expectations for pricing power in new areas introduced [70][72] Question: Implementation of electronic table games and tax rates - The rollout will be cautious due to regulatory and taxation challenges, with a focus on gradual acceptance [78] Question: Growth opportunities at existing properties amid macro uncertainty - Management emphasized organic growth in Kentucky properties and ongoing projects in Virginia, with a focus on managing costs [91][92] Question: Trends in Virginia for existing assets - Management expressed optimism about Virginia's market potential, despite recent challenges [100][101] Question: Consumer segment trends and performance - Management highlighted the importance of customer data for managing performance, particularly in less mature properties [106][108] Question: Capital allocation and buybacks - Management indicated that capital allocation decisions will be based on where the best returns can be achieved, including potential buybacks [112][114] Question: Changes for the Derby next year - Management plans to evaluate customer feedback and adjust offerings based on data collected post-Derby [120][122] Question: Comparability of Derby performance this year versus last year - Management acknowledged macroeconomic uncertainties but remains confident in strong demand for the event [130][131]