4 unchanged sentences
In March 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic.
−Removed: Considerable uncertainty still surrounds the potential effects of the COVID-19 virus, and the extent of and effectiveness of responses taken on international, national and local levels.
−Removed: Measures taken to limit the impact of COVID-19, including shelter-in-place orders, social distancing measures, travel bans and restrictions, and business and government shutdowns, have resulted and some continue to result in significant negative economic impacts in the U.S.
−Removed: and in relation to our business.
+Added: Considerable uncertainty still surrounds the continued effects of the COVID-19 virus, including the emergence of variant strains, and the extent of and effectiveness of responses taken on international, national and local levels.
The long-term impact of COVID-19 on the U.S.
and world economies and continued impact on our business remains uncertain, the duration and scope of which cannot currently be predicted.
+Added: The COVID-19 pandemic and the measures taken by national, state, and local authorities in response have adversely affected and could in the future materially adversely impact the Company's business, results of operations, and financial condition.
Our operating results depend, in large part, on revenues derived from customers visiting our casinos and racetracks.
−Removed: In March 2020, we announced the temporary suspension of operations of all of our wholly-owned gaming properties, certain wholly-owned racing operations, and the two casino properties related to our equity investments.
−Removed: Starting in mid-February, U.S.
−Removed: and international sporting events were cancelled, which reduced our sports betting options for our customers.
−Removed: Horse racing content for wagering on TwinSpires also decreased, although handle increased as our customers wagered more on the content that was available.
−Removed: Although vaccines are now available, distribution is currently limited and there can be no assurance that these vaccines will be successful in ending the COVID-19 global pandemic.
−Removed: In May 2020, we began to reopen our properties with patron restrictions and gaming limitations.
−Removed: One property temporarily suspended operations again in July 2020 after reopening and reopened in August 2020, and three properties suspended operations in December 2020 and reopened in January 2021.
−Removed: We implemented a number of initiatives to facilitate social distancing and enhanced cleaning, such as increased frequency of cleaning and sanitizing of all high-touch surfaces, mandatory temperature checks of all guests and team members upon entry and required training for all team members on safety protocols.
−Removed: Certain amenities at our properties continue to be suspended, including food buffets and valet services, and certain restaurants and food outlets.
−Removed: We cannot predict how soon our casino and racetrack properties will be able to return to customary operations.
−Removed: Our ability to return to our customary operations will depend, in part, on the actions of a number of governmental bodies over which we have no control.
−Removed: Once all restrictions are lifted, it is unclear how quickly customers will return to our casinos and racetracks, which may be a function of continued concerns over safety and decreased consumer spending due to economic conditions, including job losses.
−Removed: Certain non-furloughed employees continue to work remotely.
−Removed: An extended period of remote work arrangements could strain business continuity plans, introduce operational risk (including but not limited to cybersecurity risks) and may impair our ability to manage our business.
−Removed: We also outsource certain business activities to third parties.
−Removed: As a result, we rely upon the successful implementation and execution of the business continuity planning of such entities in the current environment.
−Removed: While we seek to monitor the business continuity activities of these third parties, successful implementation and execution of their business continuity strategies are largely outside our control.
−Removed: If one or more of the third parties to whom we outsource certain business activities experience operational failures or business disruption as a result of the impacts from the spread of COVID-19, or claim that they cannot perform, it may have negative effects on our business and financial condition.
−Removed: The Company reduced planned maintenance and project capital expenditures for 2020 as a result of the temporary property and operations closures and prioritized capital investments based on the highest near-term return opportunities in order to maintain financial flexibility.
−Removed: We are currently following the recommendations of local and federal health authorities to minimize exposure risk for our various stakeholders, including employees.
−Removed: The full extent of the impact of COVID-19 on our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and the actions required to contain COVID-19, the duration and spread of COVID-19 within the markets in which we operate, the availability of, use of and effectiveness of vaccines, mandates and directives from federal, state and local authorities, the effect of COVID-19 on consumer confidence and spending and our ability to maintain a sufficient workforce.
−Removed: If we do not respond appropriately to the pandemic, or if state and local authorities or customers do not perceive our response to be adequate, we could suffer damage to our reputation and our brand, which could adversely affect our business in the future.
−Removed: Our business could be adversely affected by the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather
+Added: The introduction of vaccine and facemask mandates in certain locations may further impact the number of customers visiting our properties.
+Added: During the course of the pandemic, we experienced temporary suspension of operations of all of our wholly-owned gaming properties, certain wholly-owned racing operations, and the two casino properties related to our equity investments.
+Added: Although all of our properties are now open to customers, certain locations continue to operate with certain restrictions and limitations on amenities, and the continued impact of the pandemic could result in further suspension of operations.
+Added: The Company continues to monitor the COVID-19 situation and take appropriate actions in accordance with the recommendations and requirements of relevant authorities.
+Added: The extent to which the COVID-19 pandemic may impact the Company's operational and financial performance remains uncertain and will depend on many factors outside the Company's control, including the timing, extent, trajectory, and duration of the pandemic, the emergence of new variants, the development, availability, distribution, and effectiveness of vaccines and treatments, the imposition of protective public safety measures, and the impact of the pandemic on the global economy.
+Added: Our business could be adversely affected by the occurrence of extraordinary events, such as terrorist attacks, public health threats, civil unrest, and inclement weather, including as a result of climate change
Our operating results depend, in large part, on revenues derived from customers visiting our casinos and racetracks, which is subject to the occurrence and threat of extraordinary events that may discourage attendance or expose us to substantial liability.
−Removed: Terrorist activity, including acts of domestic terrorism, or other actions that discourage attendance at other locations, or even the threat of such activity, including public concerns regarding air travel, military actions, safety and additional national or local catastrophic incidents, could result in reduced attendance at Churchill Downs Racetrack and at our other locations.
+Added: Terrorist activity, including acts of domestic terrorism, civil unrest or other actions that discourage attendance at other locations, or even the threat of such activity, including public concerns regarding air travel, military actions, safety and additional national or local catastrophic incidents, could result in reduced attendance at Churchill Downs Racetrack and at our other locations.
A major epidemic or pandemic, outbreak of a contagious equine disease, or the threat of such an event, could also adversely affect attendance and could impact the supply chain for our major construction projects resulting in higher costs and delays of the projects.
The COVID-19 global pandemic resulted in the temporary suspension of operations of all of our wholly-owned gaming properties, certain wholly-owned racing operations, and the two casino properties related to our equity investments.
−Removed: Even though our properties have reopened, such properties continue to be subject to operational restrictions that may impact attendance.
−Removed: Riots, civil insurrection or social unrest could adversely affect attendance.
−Removed: For example, during the second and third quarters of 2020, certain areas of Louisville, Kentucky, experienced sustained protests and civil unrest.
−Removed: Similar events in the future could adversely affect attendance at Churchill Downs Racetrack.
While we are constantly evaluating our security precautions in an effort to ensure the safety of the public, no security measures can guarantee safety and there can be no assurances of avoiding potential liabilities.
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Strategic Risks
+Added: A lack of confidence in the integrity of our core businesses or any deterioration in our reputation could affect our ability to retain our customers and engage with new customers
+Added: Horse racing, pari-mutuel wagering and casino gaming businesses depend on the public perception of integrity and fairness in their operations.
+Added: To prevent cheating or erroneous payouts, necessary oversight processes must be in place to ensure that such activities cannot be manipulated.
+Added: A lack or loss of confidence in the fairness of our industries could have a material adverse impact on our business.
+Added: Acts of fraud or cheating in our gaming businesses through the use of counterfeit chips, covert schemes and other tactics, possibly in collusion with our employees, may be attempted or committed by our gaming customers with the aim of increasing their winnings.
+Added: Our gaming customers, visitors and employees may also commit crimes such as theft in order to obtain chips not belonging to them.
+Added: We have taken measures to safeguard our interests including the implementation of systems, processes and technologies to mitigate against these risks, extensive employee training, surveillance, security and investigation operations and adoption of appropriate security features on our chips such as embedded radio frequency identification tags.
+Added: Despite our efforts, we may not be successful in preventing or detecting such culpable behavior and schemes in a timely manner and the relevant insurance we have obtained may not be sufficient to cover our losses depending on the incident, which could result in losses to our gaming operations and generate negative publicity, both of which could have an adverse effect on our reputation, business, results of operations and cash flows.
+Added: Other factors that could influence our reputation include the quality of the services we offer and our actions with regard to social issues such as diversity, human rights and support for local communities.
+Added: Broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of us or our properties.
+Added: It may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate.
+Added: Negative events and publicity could quickly and materially damage perceptions of us, our properties, or our industries, which, in turn, could adversely impact our business, financial condition or results of operations through loss of customers, loss of business opportunities, lack of acceptance of our company to operate in host communities, employee retention or recruiting difficulties or other difficulties.
+Added: An inability to attract and retain key and highly-qualified and skilled personnel, as well as disruptions in the general labor market, could impact our ability to successfully develop, operate, and grow our business
+Added: We believe that our success depends in part on our ability to hire, develop, motivate and retain highly-qualified and skilled employees throughout our organization.
+Added: If we do not successfully hire, develop, motivate and retain highly qualified and skilled employees, it is likely that we could experience significant disruptions in our operations and our ability to successfully develop, operate, and grow our business could be impacted.
+Added: Competition for the type of talent we seek to hire is increasingly intense in the geographic areas in which we operate.
+Added: As a result, we may incur significant costs to attract and retain highly skilled employees.
+Added: We may be unable to attract and retain the personnel necessary to sustain our business or support future growth.
+Added: Certain of our key employees are required to file applications with the gaming authorities in each of the jurisdictions in which we operate and are required to be licensed or found suitable by these gaming authorities.
+Added: If the gaming authorities were to find a key employee unsuitable for licensing, we may be required to sever the employee relationship, or the gaming authorities may require us to terminate the employment of any person who refuses to file appropriate applications.
+Added: Either result could significantly impact our operations.
+Added: We have observed an increasingly competitive labor market.
+Added: Increased employee turnover, changes in the availability of our workers, or labor shortages in our supply chain could result in increased costs and impact our ability to fully staff our operations, which could negatively affect our financial condition, results of operations, or cash flows.
Our Company faces significant competition, and we expect competition levels to increase
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Expansion of land-based and iGaming in other jurisdictions (both regulated and unregulated) could further compete with our traditional and iGaming operations, which could have an adverse impact on our financial condition, results of operations and cash flows.
−Removed: Our operations also face competition from other leisure and entertainment activities, including shopping, athletic events, television and movies, concerts and travel.
Legalized gaming is currently permitted in various forms throughout the U.S.
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New, relocated or expanded operations by other persons could increase competition for our operations and could have a material adverse impact on us.
+Added: Our operations also face competition from other leisure and entertainment activities, including shopping, athletic events, television and movies, concerts and travel.
Our Churchill Downs Racetrack and the Kentucky Derby may be adversely affected by changes in consumer preferences, attendance, wagering, and sponsorships
Our Churchill Downs Racetrack is dependent upon the number of people attending and wagering on live horse races.
−Removed: According to industry sources, pari-mutuel handle declined on average 4.6% per year from 2008 to 2014 due to a number of factors, including increased competition from other wagering and entertainment alternatives.
−Removed: From 2015 to 2018, pari-mutuel handle on horse racing has been relatively stable with average annual growth of 1.7%.
−Removed: In 2019 and 2020, pari-mutuel handle decreased on average 1.5% per year due to horse race cancellations from safety concerns in California in 2019 and due to the COVID-19 global pandemic in 2020.
−Removed: If interest in horse racing is lower in the future, it may have a negative impact on revenue and profitability in our Churchill Downs segment.
+Added: If interest in horse racing is lower in the future, it may have a negative impact on revenue and profitability in our Live and Historical Racing segment.
+Added: In addition, accidents and adverse events that may occur at our race track and any reputational damage as a result may negatively impact attendance at our live horse races.
If attendance at and wagering on live horse racing declines, it could have a material adverse impact on our business.
1 unchanged sentence
Our ability to retain sponsors, acquire new sponsors, and compete for sponsorships and advertising dollars could have a material adverse impact on our business.
−Removed: An inability to attract and retain key and highly-qualified and skilled personnel could impact our ability to successfully develop, operate, and grow our business
−Removed: We believe that our success depends in part on our ability to hire, develop, motivate and retain highly-qualified and skilled employees throughout our organization.
−Removed: If we do not successfully hire, develop, motivate and retain highly qualified and skilled employees, it is likely that we could experience significant disruptions in our operations and our ability to successfully develop, operate, and grow our business could be impacted.
−Removed: Competition for the type of talent we seek to hire is increasingly intense in the geographic areas in which we operate.
−Removed: As a result, we may incur significant costs to attract and retain highly skilled employees.
−Removed: We may be unable to attract and retain the personnel necessary to sustain our business or support future growth.
−Removed: Certain of our key employees are required to file applications with the gaming authorities in each of the jurisdictions in which we operate and are required to be licensed or found suitable by these gaming authorities.
−Removed: If the gaming authorities were to find a key employee unsuitable for licensing, we may be required to sever the employee relationship, or the gaming authorities may require us to terminate the employment of any person who refuses to file appropriate applications.
−Removed: Either result could significantly impact our operations.
−Removed: A lack of confidence in the integrity of our core businesses or any deterioration in our reputation could affect our ability to retain our customers and engage with new customers
−Removed: Horse racing, pari-mutuel wagering and casino gaming businesses depend on the public perception of integrity and fairness in their operations.
−Removed: To prevent cheating or erroneous payouts, necessary oversight processes must be in place to ensure that such activities cannot be manipulated.
−Removed: A lack or loss of confidence in the fairness of our industries could have a material adverse impact on our business.
−Removed: Acts of fraud or cheating in our gaming businesses through the use of counterfeit chips, covert schemes and other tactics, possibly in collusion with our employees, may be attempted or committed by our gaming customers with the aim of increasing their winnings.
−Removed: Our gaming customers, visitors and employees may also commit crimes such as theft in order to obtain chips not belonging to them.
−Removed: We have taken measures to safeguard our interests including the implementation of systems, processes and technologies to mitigate against these risks, extensive employee training, surveillance, security and investigation operations and adoption of appropriate security features on our chips such as embedded radio frequency identification tags.
−Removed: Despite our efforts, we may not be successful in preventing or detecting such culpable behavior and schemes in a timely manner and the relevant insurance we have obtained may not be sufficient to cover our losses depending on the incident, which could result in losses to our gaming operations and generate negative publicity, both of which could have an adverse effect on our reputation, business, results of operations and cash flows.
−Removed: Other factors that could influence our reputation include the quality of the services we offer and our actions with regard to social issues such as diversity, human rights and support for local communities.
−Removed: Broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of us or our properties.
−Removed: It may be difficult to control or effectively manage negative publicity, regardless of whether it is accurate.
−Removed: Negative events and publicity could quickly and materially damage perceptions of us, our properties, or our industries, which, in turn, could adversely impact our business, financial condition or results of operations through loss of customers, loss of business opportunities, lack of acceptance of our company to operate in host communities, employee retention or recruiting difficulties or other difficulties.
We are subject to significant risks associated with our equity investments, strategic alliances and other third-party agreements
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With any third-party arrangement, there is a risk that our partners’ economic, business or legal interests or objectives may not be aligned with ours, leading to potential disagreements and/or failure of the applicable project or initiative.
−Removed: We are also subject to risks relating to our co-investors’ failure to satisfy contractual obligations, conflicts arising between us and any of our partners and changes in the ownership of any of our co-investors.
+Added: subject to risks relating to our co-investors’ failure to satisfy contractual obligations, conflicts arising between us and any of our partners and changes in the ownership of any of our co-investors.
Any of these risks could have a material adverse impact on our business.
We may not be able to respond to rapid technological changes in a timely manner, which may cause customer dissatisfaction
−Removed: Our Online Wagering and Gaming segments are characterized by the rapid development of new technologies and the continuous introduction of new products.
+Added: Our TwinSpires and Gaming segments are characterized by the rapid development of new technologies and the continuous introduction of new products.
Our main technological advantage versus potential competitors is our software lead-time in the market and our experience in operating an Internet-based wagering network.
3 unchanged sentences
Further technological developments may cause our products or technologies to become obsolete or noncompetitive.
−Removed: The concentration and evolution of the slot machine manufacturing industry or other technological conditions could impose additional costs on us
−Removed: The majority of our gaming revenue is attributable to slot, VLTs, and video poker machines operated by us at our casinos and wagering facilities, and there are a limited number of slot machine manufacturers servicing the gaming industry.
+Added: The concentration and evolution of the slot machine and HRM manufacturing industry or other technological conditions could impose additional costs on us
+Added: A significant amount of our revenue is attributable to slot, HRM, VLTs, and video poker machines operated by us at our properties, and there are a limited number of slot machine and HRM manufacturers servicing the industry.
It is important for competitive reasons that we offer the most popular and up-to-date machine games with the latest technology to our guests.
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The failure to maintain agreements with, or obtain consents from, the Horsemen's Groups on satisfactory terms or the refusal by a Horsemen’s Group to consent to third parties accepting wagers on our races or our accepting wagers on third-parties’ races could have a material adverse impact on our business, as such failure will result in our inability to conduct live racing and export and import simulcasting.
−Removed: From time to time, the Thoroughbred Owners of California, the Horsemen’s Group representing horsemen in California, the Florida Horsemen’s Benevolent and Protective Association, Inc., which represents horsemen in Florida, and the Kentucky Horsemen’s Benevolent and Protective Association have withheld their consent to send or receive racing signals among racetracks.
+Added: From time to time, certain Horsemen’s Groups have withheld their consent to send or receive racing signals among racetracks.
Failure to receive the consent of these Horsemen’s Groups for new and renewing simulcast agreements could have a material adverse impact on our business.
3 unchanged sentences
As a result, we may be unable to distribute our racing content to other locations or to receive other racetracks’ racing content for wagering at our racetracks.
−Removed: The inability to distribute our racing content could have a material adverse impact on our business, results of operations and financial condition.
−Removed: We intend to expand our TwinSpires Sports and Casino business and there can be no assurance that we will be able to compete effectively, that our expansion initiatives will be successful, or that we will generate sufficient returns on our investment
+Added: inability to distribute our racing content could have a material adverse impact on our business, results of operations and financial condition.
+Added: We intend to focus on market access and our retail operations for our TwinSpires Sports and Casino business and there can be no assurance that we will be able to compete effectively or that we will generate sufficient returns on our investment
During the second quarter of 2018, the U.S.
Supreme Court overturned the federal ban on sports betting.
−Removed: As a result, several jurisdictions in which we operate legalized sports betting and / or iGaming and additional jurisdictions may do so in the future.
−Removed: The success of our TwinSpires Sports and Casino business is dependent on potential legislation in various jurisdictions that affect the sports betting and iGaming industries in the U.S.
−Removed: We continue to engage with state lawmakers in our other jurisdictions to advocate for the passage of sports betting and iGaming laws with reasonable tax rates and license fees.
−Removed: There can be no assurances when, or if, regulations enabling sports betting and online casino gaming and poker will be adopted, or the terms of such regulations, in certain of the jurisdictions in which we operate.
−Removed: States or the federal government may legalize online sports betting and iGaming in a manner that is unfavorable to us.
−Removed: If, like Nevada and New Jersey, state jurisdictions enact legislation legalizing online sports betting and iGaming subject to a brick-and-mortar requirement, we may be unable to offer online sports betting and iGaming in such jurisdictions if we are unable to establish an affiliation with a brick-and-mortar casino in such jurisdiction on acceptable terms.
−Removed: In order to compete successfully, we may need to enter into agreements with strategic partners and other third-party vendors and we may not be able to do so on terms that are favorable to us.
−Removed: If we are unable to obtain, or are otherwise delayed in obtaining, the necessary licenses to operate our TwinSpires Sports and Casino business in U.S.
−Removed: jurisdictions where online sports betting and iGaming are legalized, our ability to grow our business could be materially impacted.
−Removed: Our ability to compete may also be impacted by our failure to obtain approval in the applicable jurisdiction of our technology and service providers in a timely manner and by our failure to efficiently implement and market our TwinSpires Sports and iGaming platform in a state that legalizes online sports betting and / or iGaming.
−Removed: Such failures could impair our business growth in these jurisdictions, which could have a material impact on our business.
−Removed: Our TwinSpires Sports and Casino business competes in a rapidly evolving and highly competitive market against an increasing number of competitors.
−Removed: The success of our proposed sports betting operations is dependent on a number of factors including the potential that the market does not develop as we anticipate, our ability to gain market share in a newly developing market, the competitive landscape and our ability to compete with new entrants in the market, our ability to implement effective, efficient, and compliant procedures and processes in each jurisdiction, changes in consumer demographics and public tastes and preferences, the performance of and licensing of third- party vendors, and the availability and popularity of other forms of entertainment.
+Added: As a result, several jurisdictions in which we operate legalized sports betting and additional jurisdictions may do so in the future.
+Added: The market for sports betting and online gaming is rapidly evolving and highly competitive with an increasing number of competitors.
+Added: The success of our retail and online sportsbook and online casino operations are dependent on a number of factors that are beyond our control, including:
+Added: • the timing of adoption of regulations authorizing betting and gaming activities,
+Added: • operating requirements and other restrictions,
+Added: • the number of allowable industry participants,
+Added: • the license fees and tax rates,
+Added: • our ability to gain market share in a newly developing market,
+Added: • the potential that the market does not develop as we anticipate,
+Added: • our ability to compete with new entrants in the market,
+Added: • changes in consumer demographics and public tastes and preferences, and
+Added: • the availability and popularity of other forms of entertainment.
+Added: There can be no assurance as to the returns that we will receive from our current and anticipated retail and online sports betting and online casino operations.
Operational Risks
−Removed: We may not be able to identify and complete expansion, acquisition or divestiture projects on time, on budget or as planned
−Removed: We expect to pursue expansion, acquisition and divestiture opportunities, and we regularly evaluate opportunities for development, including acquisitions or other strategic corporate transactions which may expand our business operations.
−Removed: We could face challenges in identifying development projects that fit our strategic objectives, identifying potential acquisition or divestiture candidates and/or development partners, finding buyers, negotiating projects on acceptable terms, and managing and integrating such acquisition or development projects.
−Removed: As described in further detail below, new developments or acquisitions may not be completed or integrated successfully.
−Removed: The divestiture of existing businesses may be affected by our ability to identify potential buyers.
−Removed: Current or future regulation may postpone a divestiture pending certain resolutions to federal, state or local legislative issues.
−Removed: New properties or developments may not be completed or integrated successfully.
+Added: Our business is subject to online security risk, including cyber-security breaches.
+Added: Loss or misuse of our stored information as a result of such a breach, including customers’ personal information, could lead to government enforcement actions or other litigation, potential liability, or otherwise harm our business
+Added: We receive, process, store and use personal information and other customer and employee data by maintaining and transmitting customers’ personal and financial information, credit card settlements, credit card funds transmissions, mailing lists and reservations information.
+Added: Our collection of such data is subject to extensive regulation by private groups, such as the payment card industry, as well as governmental authorities, including gaming authorities.
+Added: There are numerous federal, state and local laws regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other data, and such privacy laws and regulations continue to evolve.
+Added: Many states have passed laws requiring notification to customers when there is a security breach for personal data, such as the 2002 amendment to California’s Information Practices Act or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to implement.
+Added: California has adopted the California Consumer Privacy Act of 2018 (the "CCPA"), which went into effect on January 1, 2020, providing California consumers greater control of the information collected, stored, and sold, and other states are considering similar legislation.
+Added: The CCPA provides a private right of action (in addition to statutory damages) for California residents whose sensitive personal information was breached as a result of a business’s violation of its duty to reasonably secure such information.
+Added: The costs of compliance with these laws may increase as a result of changes in interpretation or changes in law.
+Added: Any failure on our part to comply with these laws or our privacy policies may subject us to significant liabilities, including governmental enforcement actions or litigation.
+Added: Our systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor, may not be successful.
+Added: Interruptions in our services or a breach of a customer’s secure data could cause current or potential users to believe that our systems are unreliable, which could permanently harm our reputation and brand.
+Added: These interruptions could also increase the burden on our engineering staff, which, in turn, could delay our introduction of new features and services on our websites and in our casinos.
+Added: Such incidents could give rise to remediation costs, monetary fines and other penalties, which could be significant.
+Added: We attempt to protect against this risk with our property and business interruption insurance, which covers damage or interruption of our systems, although there is no assurance that such insurance will be adequate to cover all potential losses.
+Added: Third-parties we work with, such as vendors, may violate applicable laws or our privacy policies, and such violations may also put our customers’ information at risk and could in turn have an adverse impact on our business.
+Added: We are also subject to payment card association rules and obligations under each association’s contracts with payment card processors.
+Added: Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for the associated expense and
+Added: If we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.
+Added: Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry, and hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks.
+Added: Many companies, including ours, have been the targets of such attacks.
+Added: Any security breach caused by hacking which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could harm our business.
+Added: Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure to the satisfaction of our players may harm our reputation and our ability to retain existing players and attract new players.
+Added: The costs to eliminate or address the foregoing security threats and vulnerabilities before or after a cyber-incident could be significant.
+Added: Our remediation efforts may not be successful and could result in interruptions, delays or cessation of service, and loss of existing or potential suppliers or customers.
+Added: As threats related to cyber-attacks develop and grow, we may also find it necessary to make further investments to protect our data and infrastructure, which may impact our results of operations.
+Added: We have insurance coverage for protection against cyber-attacks, which is designed to cover expenses around notification, credit monitoring, investigation, crisis management, public relations, and legal advice.
+Added: This insurance coverage may not be sufficient to cover all possible claims, and we could suffer losses that could have a material adverse effect on our business.
+Added: Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
+Added: Our operations rely heavily on technology services, and catastrophic events and system failures with respect to these technology services could cause a significant and continued disruption to our operations
+Added: We rely on information technology and other systems to manage our business.
+Added: A disruption or failure in our technology systems or operations in the event of a cyber-attack, major earthquake, weather event, terrorist attack or other catastrophic event could interrupt our operations, damage our properties and reduce the number of customers who visit our facilities in the affected areas.
+Added: Security breaches could expose the Company to a risk of loss or misuse of our or our customers’ information, litigation and potential liability.
+Added: In addition, cyber incidents that impact the availability, reliability, speed, accuracy or other proper functioning of our technology systems could impact our operations.
+Added: A significant cyber incident, including system failure, security breach, disruption by malware or other damage could interrupt or delay our operations, result in a violation of applicable privacy and other laws, damage our reputation, subject us to litigation, cause a loss of customers or give rise to remediation costs, monetary fines and other penalties, which could be significant.
+Added: Our online wagering, HRM and brick-and-mortar casino businesses depend upon our communications hardware and our computer hardware.
+Added: We have built certain redundancies into our systems to attempt to avoid downtime in the event of outages, system failures or damage.
+Added: Our systems also remain vulnerable to damage or interruption from floods, fires, power loss, telecommunication failures, terrorist cyber-attacks, hardware or software error, computer viruses, computer denial-of-service attacks and similar events.
+Added: Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems could result in lengthy interruptions in our services.
+Added: Any unscheduled interruption in the availability of our websites and our services could result in an immediate, and possibly substantial, loss of revenue.
+Added: We may not be able to identify and / or complete acquisitions, divestitures, development of new venues or the expansion of existing facilities on time, on budget or as planned
+Added: We pursue acquisitions, divestitures, development of new venues and expansion of existing facilities to grow our business.
+Added: We face challenges in identifying and completing acquisitions or divestiture opportunities or other development or expansion projects that fit with our strategic objectives.
+Added: These projects require significant capital commitments and the incurrence of additional debt.
+Added: These projects also have risks associated with managing and integrating the acquisition or expansion project.
+Added: We signed a definitive agreement to acquire substantially all of the assets of Peninsula Pacific Entertainment LLC ("P2E") for total consideration of $2.485 billion.
+Added: Important factors for the proposed P2E transaction include the receipt of regulatory approvals on terms desired or anticipated, unanticipated difficulties or expenditures relating to the proposed transaction, including, without limitation, difficulties that result in the failure to realize expected synergies, efficiencies and cost savings from the proposed transaction within the expected time period (if at all), our ability to obtain financing on the anticipated terms and schedule, disruptions of our or P2E’s current plans, operations and relationships with customers and suppliers caused by the announcement and pendency of the proposed transaction, and our and P2E’s ability to consummate a sale-leaseback transaction with respect to the Hard Rock Sioux City on terms desired or anticipated.
+Added: Supply chain disruptions and inflationary pressure related to these projects could lead to delays and higher project costs.
+Added: The acquisition or divestiture of businesses may be delayed by external factors beyond our control including federal, state, and local issues.
+Added: The impact of these risks may cause us to realize the intended benefits of these capital investments which could have a material adverse impact on our business.
We may experience difficulty in integrating recent or future acquisitions into our operations
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We perform financial, operational and legal diligence on the businesses we purchase;
−Removed: however, an unavoidable level of risk remains regarding the actual condition of these businesses and our ability to continue to operate them successfully and integrate them into our existing operations.
+Added: however, an unavoidable level of risk remains regarding the actual condition of these businesses and our ability to continue to operate these businesses successfully and integrate them into our existing operations.
In any acquisition we make, we face risks that include the following:
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• the potential loss of key employees or customers,
−Removed: • the possibility that we may be unable to retain or recruit managers with the necessary skills to manage the acquired businesses, and
+Added: • the possibility that we may be unable to retain or recruit employees with the necessary skills to manage the acquired businesses, and
• changes to legal and regulatory guidelines which may negatively affect acquisitions.
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We may decide to develop, construct and open hotels, casinos, other gaming venues, or racetracks in response to opportunities that may arise.
−Removed: Future development projects may require significant capital commitments and the incurrence of additional debt, which could have a material adverse impact on our business.
+Added: For example, in July 2021, we announced three major multi-year capital investments to transform key areas of Churchill Downs Racetrack:
+Added: the Homestretch Club, the Turn 1 Experience, and the Paddock and Under the Spires projects.
+Added: Future development projects may require significant capital commitments and the incurrence of additional debt, which could
+Added: have a material adverse impact on our business.
+Added: In addition, we may not receive the intended benefits of such capital investments.
Ownership and development of our real estate requires significant expenditures and ownership of such properties is subject to risk, including risks related to environmental liabilities
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If we fail to comply with environmental laws or if contamination is discovered, a court or government agency could impose severe penalties or restrictions on our operations or assess us with the costs of taking remedial actions.
−Removed: We recently incurred such a penalty in connection with alleged CAFO non-compliance at Fair Grounds Race Course, as further discussed in Item 3, Legal Proceedings.
Enforcement of such regulations have been receiving increased governmental attention and compliance with these and other environmental laws can, in some circumstances, require significant capital expenditures (including with respect to fines).
−Removed: Our operations rely heavily on technology services, and catastrophic events and system failures with respect to these technology services could cause a significant and continued disruption to our operations
−Removed: We rely on information technology and other systems to manage our business.
−Removed: A disruption or failure in our technology systems or operations in the event of a cyber-attack, major earthquake, weather event, terrorist attack or other catastrophic event could interrupt our operations, damage our properties and reduce the number of customers who visit our facilities in the affected areas.
−Removed: Security breaches could expose the Company to a risk of loss or misuse of our or our customers’ information, litigation and potential liability.
−Removed: In addition, cyber incidents that impact the availability, reliability, speed, accuracy or other proper functioning of our technology systems could impact our operations.
−Removed: A significant cyber incident, including system failure,
−Removed: security breach, disruption by malware or other damage could interrupt or delay our operations, result in a violation of applicable privacy and other laws, damage our reputation, subject us to litigation, cause a loss of customers or give rise to remediation costs, monetary fines and other penalties, which could be significant.
−Removed: Our online wagering, HRM and brick-and-mortar casino businesses depend upon our communications hardware and our computer hardware.
−Removed: We have built certain redundancies into our systems to attempt to avoid downtime in the event of outages, system failures or damage.
−Removed: Our systems also remain vulnerable to damage or interruption from floods, fires, power loss, telecommunication failures, terrorist cyber-attacks, hardware or software error, computer viruses, computer denial-of-service attacks and similar events.
−Removed: Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problems could result in lengthy interruptions in our services.
−Removed: Any unscheduled interruption in the availability of our websites and our services could result in an immediate, and possibly substantial, loss of revenue.
−Removed: Our business is subject to online security risk, including cyber-security breaches.
−Removed: Loss or misuse of our stored information as a result of such a breach, including customers’ personal information, could lead to government enforcement actions or other litigation, potential liability, or otherwise harm our business
−Removed: We receive, process, store and use personal information and other customer and employee data by maintaining and transmitting customers’ personal and financial information, credit card settlements, credit card funds transmissions, mailing lists and reservations information.
−Removed: Our collection of such data is subject to extensive regulation by private groups, such as the payment card industry, as well as governmental authorities, including gaming authorities.
−Removed: There are numerous federal, state and local laws regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other data, and such privacy laws and regulations continue to evolve.
−Removed: Many states have passed laws requiring notification to customers when there is a security breach for personal data, such as the 2002 amendment to California’s Information Practices Act or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to implement.
−Removed: California has adopted the California Consumer Privacy Act of 2018 (the "CCPA"), which went into effect on January 1, 2020, providing California consumers greater control of the information collected, stored, and sold, and other states are considering similar legislation.
−Removed: The CCPA provides a private right of action (in addition to statutory damages) for California residents whose sensitive personal information was breached as a result of a business’s violation of its duty to reasonably secure such information.
−Removed: The costs of compliance with these laws may increase as a result of changes in interpretation or changes in law.
−Removed: Any failure on our part to comply with these laws or our privacy policies may subject us to significant liabilities, including governmental enforcement actions or litigation.
−Removed: Our systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor, may not be successful.
−Removed: Interruptions in our services or a breach of a customer’s secure data could cause current or potential users to believe that our systems are unreliable, which could permanently harm our reputation and brand.
−Removed: These interruptions could also increase the burden on our engineering staff, which, in turn, could delay our introduction of new features and services on our websites and in our casinos.
−Removed: Such incidents could give rise to remediation costs, monetary fines and other penalties, which could be significant.
−Removed: We attempt to protect against this risk with our property and business interruption insurance, which covers damage or interruption of our systems, although there is no assurance that such insurance will be adequate to cover all potential losses.
−Removed: Third-parties we work with, such as vendors, may violate applicable laws or our privacy policies, and such violations may also put our customers’ information at risk and could in turn have an adverse impact on our business.
−Removed: We are also subject to payment card association rules and obligations under each association’s contracts with payment card processors.
−Removed: Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for the associated expense and penalties.
−Removed: If we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.
−Removed: Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry, and hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks.
−Removed: Many companies, including ours, have been the targets of such attacks.
−Removed: Any security breach caused by hacking which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could harm our business.
−Removed: Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure to the satisfaction of our players may harm our reputation and our ability to retain existing players and attract new players.
−Removed: The costs to eliminate or address the foregoing security threats and vulnerabilities before or after a cyber-incident could be significant.
−Removed: Our remediation efforts may not be successful and could result in interruptions, delays or cessation of service, and loss of existing or potential suppliers or customers.
−Removed: As threats related to cyber-attacks develop and grow, we may also find it
−Removed: necessary to make further investments to protect our data and infrastructure, which may impact our results of operations.
−Removed: We have insurance coverage for protection against cyber-attacks, which is designed to cover expenses around notification, credit monitoring, investigation, crisis management, public relations, and legal advice.
−Removed: This insurance coverage may not be sufficient to cover all possible claims, and we could suffer losses that could have a material adverse effect on our business.
−Removed: Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
Horse racing is an inherently dangerous sport and our racetracks are subject to personal injury litigation
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Such matters may include investigations or litigation from various parties, including vendors, customers, state and federal agencies, stockholders and employees relating to intellectual property, employment, consumer, personal injury, corporate governance, commercial or other matters arising in the ordinary course of business.
−Removed: Judicial actions involving third parties may also indirectly impact our business.
−Removed: For example, as described further in Item 3.
−Removed: Legal Proceedings, in this Annual Report on Form 10-K, on September 24, 2020, the Kentucky Supreme Court issued an opinion reversing a prior ruling of the Franklin Circuit Court with respect to the legality of certain Encore/Exacta historical racing machines in operation in Kentucky as of the January 2018 trial date, and holding that wagers placed through such machines are not pari-mutuel and are therefore prohibited under Kentucky law.
−Removed: Although we do not use the Encore/Exacta system in any of our historical racing machine facilities, this opinion, depending on how it is interpreted and enforced or addressed by the legislature may impact our historical racing machine facilities in Kentucky.
We have also been subject to claims in cases concerning or similar to class action allegations.
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Regulators may also levy substantial fines against or seize our assets, the assets of our subsidiaries or the people involved in violating gaming laws or regulations.
−Removed: Any of these events could have a material adverse effect on our financial condition, results of operations and cash flows.
−Removed: We have demonstrated suitability to obtain and have obtained all governmental licenses, registrations, permits and approvals necessary for us to operate our existing businesses.
−Removed: There can be no assurance that we will be able to retain those existing licenses or demonstrate suitability to obtain any new licenses, registrations, permits or approvals.
−Removed: In addition, the loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for a license in another jurisdiction.
+Added: There can be no assurance that we will be able to retain our existing governmental licenses, registrations, permits or approvals necessary to operate our existing businesses or demonstrate suitability to obtain any licenses, registrations, permits, or approvals.
+Added: The loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for a license in another jurisdiction.
As we expand our operations in our existing jurisdictions or to new areas, we may have to meet additional suitability requirements and obtain additional licenses, registrations, permits and approvals from authorities in these jurisdictions.
The approval process can be time-consuming and costly, and we cannot be sure that we will be successful.
−Removed: Our Churchill Downs segment is subject to extensive state and local regulation, and we depend on continued state approval of legalized pari-mutuel wagering in states where we operate.
+Added: Our Live and Historical Racing segment is subject to extensive state and local regulation, and we depend on continued state approval of legalized pari-mutuel wagering in states where we operate.
Our wagering and racing (including HRM) facilities must meet the licensing requirements of various regulatory authorities.
−Removed: To date, we have obtained all governmental licenses, registrations, permits and approvals necessary for operation.
+Added: We have obtained all governmental licenses, registrations, permits and approvals necessary for operation.
However, we may be unable to maintain our existing licenses.
−Removed: The failure to obtain such licenses in the future or the loss of or material change in our business licenses, registrations, permits or approvals may materially limit the number of races we conduct or our racing (including HRM) operations, and could have a material adverse impact on our business.
−Removed: In addition, the loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for a license in another jurisdiction.
+Added: The failure to obtain such licenses in the future or the loss of or material change in our business licenses, registrations, permits or approvals may materially limit the number of races we conduct or our racing (including HRM) operation.
+Added: The loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for a license in another jurisdiction.
Regulatory authorities also have input into important aspects of our operations, including hours of operation, location or relocation of a facility, and numbers and types of HRMs.
Regulators may also levy substantial fines against or seize our assets or the assets of our subsidiaries or the people involved in violating pari-mutuel laws or regulations.
−Removed: Any of these events could have an adverse impact on our business.
TwinSpires accepts ADWs from customers of certain states who set up and fund accounts from which they may place wagers via telephone, mobile device or through the Internet pursuant to the Interstate Horseracing Act and relevant licenses and consents.
The online horse racing wagering business is heavily regulated, and laws governing ADW pari-mutuel wagering vary from state to state.
−Removed: State attorney generals, regulators, and other law enforcement officials may interpret state laws, federal laws, constitutional principles, and the related regulations in a different manner than we do which could have an adverse impact on our business.
−Removed: Our expansion opportunities with respect to ADW may be limited unless more states amend their laws or regulations to permit ADW.
−Removed: Conversely, if states take affirmative action to make ADW expressly unlawful, this could have a material adverse impact on our business.
−Removed: For example, we ceased accepting wagers from Texas residents in September 2013 due to the enforcement of a Texas law prohibiting ADW.
−Removed: Legal challenges and regulatory and legislative processes can be lengthy, costly and uncertain.
+Added: State attorney generals, regulators, and other law enforcement officials may interpret state laws, federal laws, constitutional principles, and the related regulations in a different manner than we do.
+Added: States may take affirmative action to make ADW expressly unlawful.
We may not be successful in lobbying state legislatures or regulatory bodies to obtain or renew required legislation, licenses, registrations, permits and approvals necessary to facilitate the operation or expansion of our online horse racing wagering business or in any legal challenge to the validity of any restrictions on ADW.
+Added: Legal challenges and regulatory and legislative processes can be lengthy, costly and uncertain.
Many states have considered and are considering interactive and Internet gaming legislation and regulations which may inhibit our ability to do business in such states or increase competition for online wagering.
−Removed: Anti-gaming conclusions and recommendations of other governmental or quasi-governmental bodies could form the basis for new laws, regulations, and enforcement policies that could have a material adverse impact on our business.
+Added: Anti-gaming conclusions and recommendations of other governmental or quasi-governmental bodies could form the basis for new laws, regulations, and enforcement policies.
The extensive regulation by both state and federal authorities of gaming activities also can be significantly affected by changes in the political climate and changes in economic and regulatory policies.
−Removed: Such effects could have a material adverse impact to the success of our ADW operations.
+Added: Any of these events could have a material adverse impact on our financial condition, results of operations, and cash flows.
Financial Risks
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If any of these lenders accelerate the repayment of borrowings, we may not have sufficient assets to repay our indebtedness and our lenders could exercise their rights against the collateral we have granted them.
+Added: Disruptions in the credit markets or changes to our credit ratings may adversely affect our business.
+Added: While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, a disruption in the credit markets, interest rate increases, changes that may result from the implementation of new benchmark rates that replace the London Interbank Offered Rate (LIBOR) or changes to our credit
+Added: ratings could negatively impact the availability or cost of funding.
+Added: Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or significantly increase our cost of capital.
Our insurance costs may increase, we may not be able to obtain similar insurance coverage in the future, and the extent to which we can recover under our insurance policies for damages sustained at our operating properties in the event of inclement weather and casualty events, all could adversely affect our business
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If we are unable to obtain sufficient insurance coverage, we could be at risk for increased potential losses, which could be substantial.
−Removed: In addition, our debt instruments and other material agreements require us to meet certain standards related to insurance coverage.
+Added: Our debt instruments and other material agreements require us to meet certain standards related to insurance coverage.
If we are unable to obtain sufficient insurance coverage to satisfy these requirements, an event of default could result under these debt instruments or material agreements.
−Removed: Furthermore, portions of our business are difficult or impracticable to insure.
−Removed: Therefore, after carefully weighing the costs, risks, and benefits of retaining versus insuring various risks, as well as the availability of certain types of insurance coverage, we may opt to retain certain risks not covered by our insurance policies.
+Added: Portions of our business are difficult or impracticable to insure.
+Added: After carefully weighing the costs, risks, and benefits of retaining versus insuring various risks, as well as the availability of certain types of insurance coverage, we may opt to retain certain risks not covered by our insurance policies.
Retained risks are associated with deductible limits or self-insured retentions, partial self-insurance programs and insurance policy coverage ceilings.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.