What changed in this filing

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Item 1. Business

2024-02-21 compared with 2023-02-22 · 136 added, 129 removed, 248 unchanged (52% of the section changed)

Churchill Downs Incorporated ("CDI" or the "Company") has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the Company’s most iconic and enduring asset, the Kentucky Derby.

Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business and the operation and development of regional casino gaming properties.

Headquartered in Louisville, Kentucky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse racing online wagering business, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties.

Business Segments

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Financial Statements and Supplementary Data, contained within this Report.

In the first quarter of 2022, we updated our operating segments to reflect the internal management reporting used by our chief operating decision maker to evaluate results of operations and to assess performance and allocate resources.

During the first quarter of 2022, our chief operating decision maker decided to include the results of our United Tote business in the TwinSpires segment as we evolve our strategy to integrate the United Tote offering with TwinSpires Horse Racing, which we believe will create additional business-to-business revenue opportunities.

The prior year results in the accompanying Consolidated Statements of Comprehensive Income (Loss) conform to this presentation.

Further discussion of segment financial information, and our planned investments in segment properties, is set forth in Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations contained within this Report.

During the fourth quarter of 2022, we updated our operating segments to reflect the geographies in which we operate.

This change is consistent with the internal management reporting used by our chief operating decision maker to evaluate results of operations and to assess performance and allocate resources.

Our internal management reporting changed primarily due to the continued growth of our business, which resulted in our chief operating decision maker's desire to review the results of the Company on a geographical basis within each reportable segment.

The commentary within Management’s Discussion and Analysis has been updated to conform to this change.

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.

The Live and Historical Racing segment primarily 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 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, hotel services, and revenue from food and beverage services.

Churchill Downs Racetrack

Churchill Downs Racetrack is in Louisville, Kentucky and is an internationally known thoroughbred racing operation best known as the home of our iconic flagship event, the Kentucky Derby.

We have conducted thoroughbred racing continuously at Churchill Downs Racetrack since 1875.

Thoroughbred racing has been conducted at Churchill Downs Racetrack since 1875.

The Kentucky Derby is the longest continuously held annual sporting event in the U.S.

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The demographic profile of our guests, global television viewership, and long-running nature of this iconic event are attractive to sponsors and corporate partners, especially those with luxury and/or marquee brands.

We conducted 65 live race days in 2020, 71 live race days in 2021 and 76 live race days in 2022.

In 2023, we anticipate conducting up to 79 live race days.

Churchill Downs Racetrack is located on 175 acres and has a one-mile dirt track, a 7/8-mile turf track, a stabling area, and a variety of areas, structures, and buildings that provide reserved seating for approximately 59,000 of our patrons.

We conducted 71 live race days in 2021 and 76 live race days in 2022.

During 2023, 72 live race days were conducted, however 14 of these race days were relocated to Ellis Park Racing and Gaming ("Ellis Park").

In 2024, we anticipate conducting approximately 83 live race days at the Churchill Downs Racetrack.

Churchill Downs Racetrack has one of the largest 4K video boards in the world sitting 80 feet above the ground and measuring 171 feet wide by 90 feet tall.

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the Homestretch Club, the First Turn Experience, and the Paddock Project.

The Company invested $36.0 million in the new Homestretch Club which opened for the 148th Kentucky Derby in May 2022.

The Homestretch Club project converted 5,200 outdoor bleacher seats into 3,250 premium reserved seats with all-inclusive amenities.

The new premium reserved seats include 2,550 stadium club seats, 66 covered terraced dining tables for up to 440 guests, 30 Trackside Lounges for up to 200 guests offering a "courtside seat" experience, five private 60-person VIP Hospitality Lounges as upgrades and an 18,600 square-foot indoor hospitality space with a grand staircase and 95-foot feature bar.

The Company is investing $90.0 million in the First Turn Experience.

The First Turn Experience will provide additional permanent stadium seating and a new track-level hospitality club replacing current temporary Oaks and Derby seating at the first turn of the racetrack.

We plan to replace 3,400 temporary seats with 5,100 permanent covered stadium seats and a new 50,000 square-foot climate-controlled hospitality venue with reserved dining room tables, a trackside viewing terrace, and two new seating concourses to allow for better guest circulation and amenities for an incremental 2,000 reserved seats.

The First Turn Experience is scheduled for completion for the 149 th Kentucky Derby in May 2023.

The Company is also investing up to $200.0 million in a Paddock Project to enhance the experience for nearly every guest.

The redesigned area will improve the flow of guests throughout the paddock.

The Paddock Project will create a larger paddock walking ring for viewing the horses prior to the races, a new Paddock Club in the area on the first floor under the Twin Spires that will provide views of the paddock and views of the tunnel that the horses walk through, new hospitality and other amenities for guests in certain areas of the third floor clubhouse seats, and new terraces overlooking the paddock.

The new Paddock Project is scheduled for completion for the 150 th Kentucky Derby in May 2024.

The Homestretch Club opened for the 148 th Kentucky Derby in May 2022.

The Homestretch Club project has 3,250 premium reserved seats which include 2,550 stadium club seats, 66 covered terraced dining tables, 30 Trackside Lounges offering a "courtside seat" experience, five private VIP hospitality lounges, and an 18,600 square-foot indoor hospitality space with a grand staircase and 95-foot feature bar.

The Company invested $90.0 million in the First Turn Experience which opened for the 149 th Kentucky Derby in May 2023.

The First Turn Experience provides 5,100 permanent covered stadium seats and added a new 50,000 square-foot climate-controlled first floor hospitality venue with 2,000 reserved dining room tables and a trackside viewing terrace.

The Company is also investing up to $200.0 million to enhance the experience for nearly every guest.

The Paddock Project will improve the flow of guests throughout the paddock, create a larger paddock walking ring for viewing the horses prior to the races, create two new clubs in the area on the first floor under the Twin Spires that will provide views of the paddock and views of the tunnel that the horses walk through, new hospitality and other amenities for guests in certain areas of the third-floor clubhouse seats, and new terraces overlooking the paddock.

The Paddock Project is scheduled for completion in time for the 150 th Kentucky Derby in May 2024.

In July 2023, we also announced a $14.0 million renovation project that will update and refresh the 61 Jockey Club Suites and associated areas along the homestretch.

The Jockey Club renovation is scheduled for completion in time for the 150 th Kentucky Derby in May 2024.

Historical Racing Properties

The following table summarizes key information regarding our current historical racing properties:

The following table summarizes key information regarding our current and planned historical racing properties:

State Property City/ Location Floor Space (Sq.

ft.) Historical Racing Machines ("HRMs")

ft.) Historical Racing Machines ("HRMs") Retail Race & Sports Book (a)

Kentucky Derby City Gaming Louisville, Kentucky 55,000 1,300 ü

Kentucky Derby City Gaming Downtown Louisville, Kentucky 43,000 500 ü

Kentucky Turfway Park Northern Kentucky 45,000 850 ü

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Kentucky Oak Grove Southwestern Kentucky 180,000 1,230 ü

Kentucky Ellis Park Western Kentucky 100,000 320

New Hampshire Chasers (a)

Salem, New Hampshire 4,000 (a)

Virginia Rosie's New Kent Central Virginia 127,000 550

Virginia Rosie's Richmond Central Virginia 54,000 700

Virginia Rosie's Hampton Southeast Virginia 38,000 700

Virginia Rosie's Vinton Southern Virginia 15,000 470

Virginia Rosie's Dumfries Northern Virginia 19,000 150

Virginia Rosie's Collinsville Southern Virginia 2,000 40

Kentucky Ellis Park Northwestern Kentucky 40,000 300 ü

Kentucky Owensboro (b)

Northwestern Kentucky 28,000 600 ü

New Hampshire Chasers (c)

Salem, New Hampshire 4,000 (c) N/A

Virginia Rosie's New Kent / Central Virginia 127,000 570 N/A

Virginia Rosie's Richmond / Central Virginia 54,000 700 N/A

Virginia Rosie's Dumfries / Northern Virginia 19,000 160 N/A

Virginia The Rose (d)

Dumfries / Northern Virginia 58,000 1,650 N/A

Virginia Rosie's Hampton / Southern Virginia 38,000 700 N/A

Virginia Rosie's Emporia / Southern Virginia 22,000 150 N/A

Virginia Rosie's Collinsville / Southern Virginia 2,000 40 N/A

Virginia Rosie's Vinton / Western Virginia 15,000 470 N/A

Total 753,000 9,680

(a) The Company plans to expand the charitable gaming facility to accommodate HRMs and table games.

The Company owns Derby City Gaming which is a state-of-the-art HRM facility that was opened in September 2018 at the Churchill Downs Racetrack auxiliary training facility.

Derby City Gaming operates under the Churchill Downs Racetrack pari-mutuel racing license and has a simulcast center and a dining facility.

We are investing $80.0 million to add 135,000 square feet to the facility which will hold up to 450 additional HRMs and to build a five-story hotel with 123 rooms including amenities to better serve and attract guests.

The expansion includes a VIP gaming area, a new sports bar, a stage for live entertainment and an upscale-casual restaurant and bar to create a variety of new food and beverage options for gaming and hotel guests.

We recently opened the new gaming space with 200 additional HRMs.

The hotel is scheduled for completion by the end of the second quarter of 2023.

The Company is also building a new $90.0 million HRM entertainment venue called Derby City Gaming Downtown ("DCG Downtown") in an existing building in downtown Louisville which is scheduled for completion in the second half of 2023.

The new entertainment venue will provide an HRM gaming area, a main-level sports bar with a stage for music and live entertainment, a premium bourbon library, and an elegant wine and charcuterie lounge for guests, including locals, tourists, and convention attendees.

The facility has 200 onsite parking spaces, and a retail and merchandise store will be located on the street level where guests can shop for Kentucky Derby-themed merchandise.

(a) The Company's retail sports betting business is included in the TwinSpires segment.

(b) The Company plans to open the Owensboro HRM entertainment venue in the first quarter of 2025.

(d) The Company plans to open The Rose (Dumfries) late in the third quarter of 2024.

Derby City Gaming & Hotel ("Derby City Gaming") is a state-of-the-art HRM facility located at the Churchill Downs Racetrack auxiliary training facility and has a simulcast center and a dining facility.

In 2023, the Company invested $78.0 million to expand the facility and to build a five-story hotel with 123 rooms including amenities to better serve and attract guests.

The expansion includes a VIP gaming area, a new sports bar, a stage for live entertainment, and an upscale-casual restaurant and bar for gaming and hotel guests.

The new gaming space and hotel opened during the second quarter of 2023.

In December 2023, the Company invested $90.0 million to build Derby City Gaming Downtown ("DCG Downtown") in an existing building in downtown Louisville.

DCG Downtown has a gaming area with approximately 500 HRMs, a main-level

sports bar with a stage for live entertainment, a premium bourbon bar, and an elegant wine lounge for guests, including locals, tourists, and convention attendees.

Southwestern Kentucky

Oak Grove Racing & Gaming ("Oak Grove") is a premier state-of-the-art live harness racing and HRM venue located on 240 acres approximately one-hour north of Nashville, Tennessee in Oak Grove, Kentucky.

Oak Grove owns and operates a 5/8-mile harness racing track.

In September 2020, the Company opened the simulcast and HRM facility with an event center and food and beverage venues.

The 128-room hotel opened in October 2020.

Oak Grove also has a 1,200-person grandstand, 3,000-person capacity outdoor amphitheater and stage, a state-of-the-art equestrian center, and a recreational vehicle park.

Oak Grove owns and operates a harness racing track, 128-room hotel, and simulcast and HRM facility with an event center and food and beverage venues.

Oak Grove also has a 3,000-person capacity outdoor amphitheater and stage, a state-of-the-art equestrian center, and a recreational vehicle park.

Oak Grove conducts approximately 30 live racing days a year.

Northern Kentucky

The Company opened Newport Racing & Gaming ("Newport") in October 2020.

Newport is an HRM entertainment venue including a simulcast area that operates as an extension of Turfway Park.

Turfway Park opened in September 2022 as a state-of-the-art live thoroughbred racing and historical racing entertainment venue with a sports bar and food and beverage offerings.

Western Kentucky

The Company acquired Ellis Park Racing & Gaming ("Ellis Park") on September 26, 2022 and assumed the opportunity to build an HRM entertainment venue in Owensboro, Kentucky.

We plan to invest approximately $75.0 million at these two facilities in the next year.

The Company acquired Colonial Downs Racetrack ("Colonial Downs") and six historical racing entertainment venues in Virginia as part of the acquisition of substantially all of the ass ets of Peninsula Pacific Entertainment LLC ("P2E") on November 1, 2022 ("P2E Transaction").

Colonial Downs conducts live thoroughbred racing and has a one and one-quarter mile dirt track, the widest turf track oval in North America and two off-track betting facilities ("OTBs").

The Company is investing $400.0 million to construct a large gaming resort and 102-room hotel at the Dumfries, Virginia location with the potential for expansion of up to 1,800 HRMs.

The Dumfries HRM facility and hotel is scheduled for completion in 2024.

The Company is also investing $30.0 million to develop a seventh HRM entertainment venue in Emporia, Virginia with a planned opening in the second half of 2023.

Turfway Park Racing & Gaming ("Turfway Park") opened in September 2022 as a state-of-the-art live racing and historical racing entertainment venue with a sports bar and restaurants just south of Cincinnati, Ohio in Florence, Kentucky.

Turfway Park owns and operates a thoroughbred racetrack and conducts approximately 70 live racing days a year.

Newport Racing & Gaming is an HRM entertainment venue and simulcast area that operates as an extension of Turfway Park located in Newport, Kentucky.

Northwestern Kentucky

The Company acquired Ellis Park in Henderson, Kentucky on September 26, 2022.

Ellis Park owns and operates a thoroughbred racetrack and conducts approximately 25 live race days a year.

Ellis Park also has a simulcast and HRM facility with food and beverage offerings.

In June 2023, the Company announced it plans to invest approximately $100.0 million in a new HRM entertainment venue on the east side of Owensboro with an expected completion in the first quarter of 2025.

The Company acquired Colonial Downs Racetrack ("Colonial Downs") and six historical racing entertainment venues across Virginia as part of the acquisition of substantially all of the assets of Peninsula Pacific Entertainment LLC ("P2E") on November 1, 2022 ("P2E Transaction").

Colonial Downs has a dirt track, the widest turf track oval in North America, a simulcast area, food and beverage offerings, and two off-track betting facilities ("OTBs").

Colonial Downs conducted 27 live racing days in 2023 and plans to conduct 28 live racing days in 2024.

The Company also invested $30.0 million in a seventh Virginia based HRM entertainment venue that opened on September 26, 2023 in Emporia, Virginia with 150 HRMs and a restaurant and bar.

The Company is investing approximately $460.0 million to construct The Rose Gaming Resort ("The Rose") in Dumfries, Virginia with a 102-room hotel and 1,650 HRMs as well as a number of food and beverage options.

The Rose has the potential to be expanded to up to 1,800 HRMs.

The Rose is scheduled to be completed late in the third quarter of 2024.

New Hampshire

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The Company plans to develop an expanded charitable gaming facility in Salem to accommodate HRMs and table games.

We plan to invest approximately $150.0 million in total in Salem, inclusive of the amount paid to the sellers of Chasers to build the expanded facility.

The TwinSpires segment includes the revenue and expenses for the TwinSpires Horse Racing, the TwinSpires Sports and Casino and the United Tote businesses.

These businesses are headquartered in Louisville, Kentucky.

TwinSpires Horse Racing operates the online horse racing wagering business for TwinSpires.com, BetAmerica.com, and other white-label platforms;

The TwinSpires segment includes the revenue and expenses from pari-mutuel wagers through our advance deposit wagering ("ADW") business, our retail and online sports betting business, totalisator services provided by United Tote, and our HRM technology provider Exacta Systems ("Exacta").

TwinSpires is headquartered in Louisville, Kentucky.

TwinSpires operates the online horse racing wagering business for TwinSpires.com, BetAmerica.com, and other white-label platforms;

facilitates high dollar wagering by certain customers;

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TwinSpires is one of the largest and most profitable legal online horse racing wagering platforms in the U.S.

TwinSpires accepts pari-mutuel wagers through advance deposit wagering ("ADW") from customers residing in certain states who establish and fund an account from which these customers may place wagers via telephone, mobile applications or through the Internet.

This business is licensed as a multi-jurisdictional simulcasting and interactive wagering hub in the state of Oregon and also holds licenses from various other states where applicable.

TwinSpires accepts pari-mutuel wagers through ADW from customers residing in certain states who establish and fund an account from which these customers may place wagers via telephone, mobile applications, or through the Internet.

This business is licensed as a multi-jurisdictional simulcasting and interactive wagering hub in the state of Oregon and holds licenses from various other states where applicable.

This business also offers customers streaming video of live horse races, replays, and an assortment of racing and handicapping information.

BetAmerica.com is an online wagering business licensed under TwinSpires that offers wagering on horse racing throughout the U.S.

BetAmerica.com is an online wagering business

licensed under TwinSpires that offers wagering on horse racing throughout the U.S.

We also provide technology services to third parties, and we earn commissions from white label ADW products and services.

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We announced two of these business-to-business agreements in 2022.

On September 8, 2022, we announced a multi-year agreement to enable FanDuel, a sportsbook and mobile betting operator, to create a fully integrated and seamless wagering experience with a single wallet for horse racing and sports with exclusive TV rights to racing content and non-exclusive Kentucky Derby sponsorship rights for sports wagering.

On September 8, 2022, we announced a multi-year agreement to enable FanDuel, a sports book and mobile betting operator, to create a fully integrated and seamless wagering experience with a single wallet for horse racing and sports with exclusive TV rights to racing content and non-exclusive Kentucky Derby sponsorship rights for sports wagering.

On November 29, 2022, the Company announced a multi-year agreement to provide DraftKings ADW technology and other services.

Sports and Casino

Our TwinSpires Sports and Casino business includes the results of our retail sportsbooks at our wholly-owned gaming properties and through third parties in Michigan and Arizona.

The Company exited the direct online Sports and Casino business during 2022 in every state except Pennsylvania and Arizona.

We executed strategic market access agreements with Bet365 in Pennsylvania and with Golden Nugget in Indiana to monetize our online wagering skins beginning in 2023.

Both agreements began in early 2023.

Sports Betting

Our TwinSpires sports betting business includes the results of our retail sports books at our wholly owned properties and online sports betting through third parties.

We have executed strategic market access agreements with Bet365 in Pennsylvania, Golden Nugget in Indiana, and various market access partners in Kentucky.

The Company also operates retail sports betting at certain of its racetracks and HRM and gaming facilities.

United Tote manufactures and operates pari-mutuel wagering systems for racetracks, OTBs, and other pari-mutuel wagering businesses.

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United Tote has contracts to provide totalisator services to several third-party racetracks, OTBs, and other pari-mutuel wagering businesses and provides these services at our facilities.

On August 11, 2022, we entered into an agreement to sell 49% of United Tote, a wholly-owned subsidiary of the Company to NYRA Content Management Solutions, LLC, a subsidiary of the New York Racing Association ("NYRA").

NYRA is a not-for-profit corporation that operates the three largest thoroughbred horse racing tracks in the state of New York.

On August 11, 2022, the Company entered into an agreement to sell 49% of United Tote, a wholly owned subsidiary of the Company to NYRA Content Management Solutions, LLC, a subsidiary of the New York Racing Association.

The Company has received a deposit on the pending transaction of $14.4 million.

The transaction is subject to usual and customary closing conditions, including applicable regulatory notices and approvals and is expected to close during the first half of 2024.

On August 22, 2023, the Company completed the acquisition of Exacta.

Exacta is a leading provider of central determinate system technology in HRMs across the country.

Exacta's system architecture supports multiple game vendors and virtually unlimited math modeling capabilities on a single central determinate system enabling Exacta to deliver a diverse gaming library to Company owned and third-party HRM entertainment venues in Kentucky, Virginia, Wyoming, and New Hampshire.

The Gaming segment includes revenue and expenses for the casino properties and associated racetracks which support the casino license.

The Gaming segment generates revenue and expenses from slot machines, table games, video lottery terminals ("VLTs"), video poker, HRM's, ancillary food and beverage services, hotel services, commission on pari-mutuel wagering, racing event-related services, and other miscellaneous operations.

The following table summarizes key information regarding our gaming properties:

The Gaming segment generates revenue and expenses from slot machines, table games, video lottery terminals ("VLTs"), video poker, HRMs, ancillary food and beverage services, hotel services, commission on pari-mutuel wagering, racing event-related services, and other miscellaneous operations.

The following table summarizes key information regarding our current and planned gaming properties:

State Property Acres Casino Space (Sq.

ft.) Slots and Video Lottery Terminals Table Games Hotel Rooms Retail Sportsbook

ft.) Slots and Video Lottery Terminals (a)

Table Games Hotel Rooms Retail Sports Book (b)

Florida Calder Casino 54 106,000 1,080 6 N/A N/A

Indiana Terre Haute Casino Resort (c)

48 36,000 1,000 34 122 ü

Iowa Hard Rock Hotel and Casino Sioux City 15 41,000 660 20 54 ü

Louisiana Fair Grounds Race Course and Slots and Video Services LLC 145 33,000 1,620 — N/A ü

Louisiana Fair Grounds Race Course and Slots and Video Services LLC 145 33,000 2,030 N/A N/A ü

Maine Oxford Casino and Hotel 97 27,000 970 24 107 N/A

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Pennsylvania Presque Isle Downs and Casino 270 61,000 1,540 34 N/A ü

Pennsylvania Lady Luck Casino Nemacolin — 25,000 600 26 N/A N/A

Equity Investments

Illinois Rivers Casino Des Plaines 21 78,000 1,520 120 N/A ü

Ohio Miami Valley Gaming and Racing 120 190,000 2,200 — N/A ü

Ohio Miami Valley Gaming and Racing 120 190,000 2,200 N/A N/A ü

Total 799,000 14,810 367 669

(a) Includes HRMs and video poker machines at Fair Grounds Race Course and Slots and Video Services LLC.

(b) The Company's retail sports betting business at its wholly owned properties is included in the TwinSpires segment.

Wholly owned gaming properties

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On June 17, 2022, the Company closed on the sale of 115.7 acres of land near Calder for $291.0 million, or approximately $2.5 million per acre, to Link Logistics Real Estate, a Blackstone portfolio company.

The Company may sell 15-20 acres of this land in the future for retail development.

As part of the P2E Transaction, the Company acquired Hard Rock Hotel and Casino Sioux City ("Hard Rock Sioux City"), which is a gaming facility and a hotel.

The Company still owns 15-20 acres that may be sold for future development.

The Company is investing up to $290.0 million in the development of the Terre Haute Casino Resort ("Terre Haute") in Terre Haute, Indiana.

Terre Haute will be a gaming entertainment venue featuring 400,000 square-feet space with 1,000 slot machines, 34 table games, a 122-room luxury hotel, a retail sportsbook, and several food and beverage offerings.

Terre Haute is scheduled to be completed in early 2024.

Fair Grounds Race Course & Slots ("Fair Grounds") is a gaming facility and race course with a bar, a simulcast facility, a one-mile dirt track, a 7/8-mile turf track, a grandstand, and a stabling area.

Terre Haute will be a gaming entertainment venue featuring 400,000 square-feet space with 1,000 slot machines, 34 table games, a 122-room luxury hotel, and several food and beverage offerings.

The Terre Haute casino is scheduled to be completed in early April 2024 and the Terre Haute hotel is scheduled to be completed by the middle of May 2024.

As part of the P2E Transaction, the Company acquired Hard Rock Hotel and Casino Sioux City, which is a gaming facility with a hotel, several food and drink offerings, and event spaces.

Fair Grounds Race Course & Slots ("Fair Grounds") is a gaming facility and racecourse with a bar, a simulcast facility, a dirt and turf track, and a stabling area.

Fair Grounds conducts approximately 80 live racing days each year.

The facility includes clubhouse and grandstand seating for approximately 5,000 guests, a general admissions area, and dining facilities.

The stable area consists of barns that can accommodate approximately 1,900 horses and living quarters for approximately 130 people.

Fair Grounds also operates pari-mutuel wagering in 15 OTBs and Video Services LLC ("VSI") is the owner and operator of video poker machines in 12 OTBs in Louisiana.

Oxford Casino and Hotel ("Oxford"), located in Oxford, Maine, is a gaming facility with a hotel and one dining facility.

Ocean Downs Casino and Racetrack is a gaming facility with a racetrack that conducts approximately 40 live harness racing days each year.

Harlow’s Casino Resort and Spa is a gaming facility and hotel.

Riverwalk Casino Hotel owns and operates a hotel and two dining facilities.

As part of the P2E Transaction, the Company acquired del Lago Resort and Casino ("del Lago") in Waterloo, New York, which is a gaming facility and a hotel.

Presque Isle Downs and Casino ("Presque Isle") is a gaming facility with a racetrack that conducts 90 live thoroughbred racing days each year.

The Company manages Lady Luck Casino Nemacolin ("Lady Luck Nemacolin"), approximately one mile from the Nemacolin Woodlands Resort under a management agreement that expires in June 2023.

The facility includes clubhouse and grandstand seating for approximately 5,000 guests, a general admissions area, and several dining facilities.

The stable area consists of barns that can accommodate approximately 1,900 horses and living quarters for approximately 130

Fair Grounds also operates over 500 HRMs in 15 OTBs and Video Services LLC ("VSI") is the owner and operator of video poker machines in 12 of those OTBs in Louisiana.

Oxford Casino and Hotel, located in Oxford, Maine, is a gaming facility with a hotel and a dining facility.

Ocean Downs Casino and Racetrack, located in Berlin, Maryland, is a gaming facility with several dining options and a racetrack that conducts approximately 45 live harness racing days each year.

Harlow’s Casino Resort and Spa is a gaming facility and hotel with two dining facilities in Greenville, Mississippi.

Riverwalk Casino Hotel is a gaming facility and hotel with two dining facilities in Vicksburg, Mississippi.

As part of the P2E Transaction, the Company acquired del Lago Resort and Casino in Waterloo, New York, which is a gaming facility and a hotel with several dining options.

Presque Isle Downs and Casino is a gaming facility with three dining facilities, an entertainment venue and thoroughbred racetrack that conducts approximately 80 live racing days each year.

Equity Investments

The Company acquired 61.3% equity ownership in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Casino Des Plaines ("Rivers Des Plaines"), in March 2019.

Rivers Des Plaines is a gaming entertainment venue located on 21 acres and has seven dining and entertainment facilities, and an approximate 5,000 square-foot state-of-the-art BetRivers Sports Bar.

During 2022, Rivers Des Plaines completed a 78,000 square-foot expansion between the existing casino building and the recently enlarged parking garage.

The two-story addition includes a new restaurant and an expanded gaming floor on the first floor, as well as a 24-table poker room, a 10,000 square-foot ballroom for private events and live entertainment, and a slot machine gaming area on the second floor.

The expansion also added approximately 725 additional gaming positions.

In March 2019, the Company acquired 61.3% equity ownership in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Casino Des Plaines ("Rivers Des Plaines").

Rivers Des Plaines is a gaming entertainment venue located on 21 acres and has seven dining facilities, and an approximate 5,000 square-foot state-of-the-art BetRivers Sports Bar.

During 2022, Rivers Des Plaines expanded the gaming floors to add approximately 850 additional gaming positions and a new restaurant, a 22-table poker room, and a 10,000 square-foot ballroom for private events and live entertainment.

The Company has a 50% equity investment in Miami Valley Gaming and Racing ("MVG").

MVG is a gaming entertainment venue with a race course, racing simulcast center, a 5/8-mile harness racetrack, and a retail sportsbook.

MVG is a gaming entertainment venue with harness racetrack, racing simulcast center, and a retail sports book.

We have aggregated Arlington International Racecourse ("Arlington") as well as certain corporate operations, and other immaterial joint ventures in All Other to reconcile to consolidated results.

Arlington is located on 326 acres in Arlington Heights, Illinois.

On February 15, 2023, the Company closed on the previously announced agreement to sell the property to the Chicago Bears for $197.2 million.

The Company has classified certain assets of Arlington totaling $82.0 million as held for sale as of December 31, 2022, on the accompanying Consolidated Balance Sheets.

For more information, refer to Note 4, Dispositions and Assets Held For Sale, to the notes to consolidated financial statements included in this Annual Report on Form 10-K.

On February 15, 2023, the Company sold its property at Arlington Heights, Illinois to the Chicago Bears for $197.2 million.

For more information, refer to Note 4, Dispositions to the notes to consolidated financial statements included in Item 8.

Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Corporate includes miscellaneous and other revenue, compensation expense, professional fees and other general and administrative expense not allocated to our segments.

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Legalized gambling is currently permitted in various forms in many states and Canada.

Other jurisdictions could legalize gambling in the future, and established gaming jurisdictions could award additional gaming licenses or permit the expansion of existing gaming operations.

Other jurisdictions could legalize gambling in the future, and established gaming jurisdictions could award additional gaming licenses or permit the expansion of

existing gaming operations.

If additional gaming opportunities become available near our racing or gaming operations, such gaming operations could have a material adverse impact on our business.

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Live and Historical Racing

In 2022 and 2021, approximately 34,000 thoroughbred horse races were conducted in the U.S.

In 2023, approximately 32,000 thoroughbred horse races were conducted in the U.S., which was down 5% compared to 2022.

As a racetrack operator, we compete for horses with other racetracks running live racing meets at or near the same time as our races.

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Our HRM entertainment venues in Kentucky, Virginia, and New Hampshire compete with regional casinos in the area and other forms of legal and illegal gaming.

Our TwinSpires Horse Racing business competes with other ADW businesses for both customers and racing content, as well as brick-and-mortar racetracks, casinos, OTBs, and other forms of legal and illegal sports betting.

Sports and Casino

Our TwinSpires Sports and Casino business competes for customers with retail, mobile and online offerings from commercial brick-and-mortar casinos and racetracks.

Our TwinSpires ADW business competes with other ADW businesses for both customers and racing content, as well as brick-and-mortar racetracks, casinos, OTBs, and other forms of legal and illegal sports betting.

Sports Betting

Our TwinSpires sports betting business competes for customers with retail, mobile, and online offerings from commercial brick-and-mortar casinos and racetracks.

We also compete with daily fantasy sports gaming companies that are expanding into mobile and online sports betting and iGaming, international sports betting businesses looking to expand into the U.S.

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Our focus is on attracting innovative and collaborative team members who want to build their skills in a successful and growing set of businesses focused on creating unique experiences for our guests.

As of December 31, 2022, we had a total of approximately 7,000 team members, of which 5,500 are full-time employees.

As of December 31, 2022, the Live and Historical Racing segment had approximately 2,410 team members, the TwinSpires segment had 410 team members, and the Gaming segment had 3,900 team members.

Nearly three-quarters of the Live and Historical Racing segment team members are full-time employees and nearly all the TwinSpires and Gaming segment team members are full-time employees.

The Company’s corporate staff consists of approximately 270 employees, approximately 260 of which are full-time.

The number of seasonal employees fluctuates significantly through the course of the year primarily due to the seasonal nature of our businesses.

As of December 31, 2023, we had a total of approximately 7,970 team members, of which approximately 5,660 are full-time employees.

The number of seasonal employees fluctuates significantly through the course of the year primarily due to the seasonal nature of our properties that conduct live racing.

We have the highest level of seasonal team members during the second quarter when we traditionally run the Kentucky Derby.

As of December 31, 2022, approximately 770 full-time employees were covered by 19 collective bargaining agreements.

As of December 31, 2023, approximately 1,120 employees were covered by 12 collective bargaining agreements.

We have experienced no material interruptions of operations due to disputes with our team members.

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In the U.S., interstate pari-mutuel wagering on horse racing is subject to the Interstate Horseracing Act of 1978, as amended in 2000 ("IHA").

Under the IHA, racetracks and ADWs can accept interstate off-track wagers if the racetracks and ADWs have approvals from (1) the host horse racetrack including a written agreement

with the horsemen’s group, if applicable, (2) the host racing commission, and (3) the off-track racing commission.

Under the IHA, racetracks and ADWs can accept interstate off-track wagers if the racetracks and ADWs have approvals from (1) the host horse racetrack including a written agreement with the horsemen’s group, if applicable, (2) the host racing commission, and (3) the off-track racing commission.

If these requirements are met, racetracks can commingle wagers from different racetracks and wagering facilities and broadcast horse racing events to other licensed establishments.

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Changes in Kentucky laws or regulations may limit or otherwise materially affect the types of HRMs that may be conducted and such changes, if enacted, could have an adverse impact on our Kentucky HRM operations.

In 2023, the Kentucky General Assembly passed a bill to authorize the KHRC to regulate sports betting.

Only licensed racetracks and their extensions can operate retail sports betting.

Each racetrack is allowed to contract with up to three providers to carryout online or retail sports betting.

Retail sports betting commenced on September 7, 2023 and online sports betting began on September 28, 2023.

In Louisiana, the 2021 Historical Horse Racing Act ("2021 HHR Act") allows OTBs to have up to 50 HRMs.

On October 25, 2022, a number of individual plaintiffs associated with video poker and truckstops, filed a lawsuit in the 19 th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including Fair Grounds, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum.

As of December 31, 2022, the Company had approximately 340 HRMs in OTBs in Louisiana.

December 31, 2023, the Company had approximately 500 HRMs in OTBs in Louisiana.

If the 2021 HHR Act is determined to be unconstitutional it could have an adverse impact on our Louisiana HRM results which are reported in our Gaming segment.

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TwinSpires is licensed in Oregon under a multi-jurisdictional simulcasting and interactive wagering totalisator hub license issued by the Oregon Racing Commission in accordance with Oregon law and the IHA.

We also hold advance deposit wagering licenses in certain other states where appropriate.

We also hold ADW licenses in certain other states where appropriate.

Changes in the form of new legislation or regulatory activity at the state or federal level could adversely impact our mobile and online ADW business.

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Removal of the ban gave states the authority to authorize sports wagering.

Thirty-three states have authorized sports betting and thirty of these states have sports betting operational as of December 31, 2022.

Sports betting has been authorized and is operational in thirty-eight states and the District of Columbia as of December 31, 2023.

Each state has different structures for the number of allowable industry participants, license fees, taxes, and other operational requirements.

As of December 31, 2022, the Company is operational in nine states for retail sports betting, two states for online sports betting, and one state for iGaming.

As of December 31, 2023, the Company is operational in nine states for retail sports betting.

Gaming Regulations and Potential Legislative Changes

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If we violate applicable gaming laws, our gaming licenses could be limited, conditioned, suspended, or revoked by gaming authorities, and we and any other persons involved could be subject to substantial fines.

A supervisor or conservator can be appointed by gaming authorities to operate our gaming properties, or in some jurisdictions, take title to our gaming assets in the jurisdiction, and under certain circumstances, income generated during such appointment could be forfeited to the applicable state or states.

A supervisor or conservator can be appointed by gaming authorities to operate our gaming properties, or in some jurisdictions, take title to our gaming assets in the

jurisdiction, and under certain circumstances, income generated during such appointment could be forfeited to the applicable state or states.

Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions.

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Depending upon the particular fee or tax involved, these fees and taxes are payable with varying frequency.

License fees and taxes are based upon such factors as a percentage of

the gaming revenue received;

License fees and taxes are based upon such factors as a percentage of the gaming revenue received;

the number of gambling devices and table games operated;

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We also are subject to laws and regulations that create liability and cleanup responsibility for releases of hazardous substances into the environment.

Under certain of these laws and regulations, a current or previous owner or operator of property may be liable for the costs of remediating hazardous substances or petroleum products on its property, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time the contamination occurred.

Under certain of these laws and regulations, a current or previous owner or operator of property may be

liable for the costs of remediating hazardous substances or petroleum products on its property, without regard to whether the owner or operator knew of, or caused, the presence of the contaminants, and regardless of whether the practices that resulted in the contamination were legal at the time the contamination occurred.

The presence of, or failure to remediate properly, such substances may materially adversely affect the ability to sell or rent such property or to borrow funds using such property as collateral.

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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.

What changed 10-K

Item 1. Business