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Item 1. Business

2025-02-20 compared with 2024-02-21 · 155 added, 165 removed, 219 unchanged (59% 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, expanded pari-mutuel content and technology services to B2C platforms, and the operation and development of regional casino gaming properties.

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

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

Business Segments

The Company manages its business through three reportable segments:

Live and Historical Racing, TwinSpires, and Gaming.

Financial information about these segments is set forth in Part II, Item 8.

Live and Historical Racing, Wagering Services and Solutions, and Gaming.

The Wagering Services and Solutions segment was previously known as the TwinSpires segment.

We aggregate our other businesses as well as certain corporate operations in All Other.

We report net revenue and operating expense associated with these reportable segments and other information about these segments in Part II, Item 8.

Financial Statements and Supplementary Data, contained within this Report.

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.

Live and Historical Racing

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.

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, other miscellaneous services, and revenue from food and beverage services.

Churchill Downs Racetrack

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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 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 Down Racetrack conducts approximately 80 live race days each year.

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 our patrons.

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The facility also has permanent lighting to accommodate night races.

We have a saddling paddock, and the stable area has barns sufficient to accommodate 1,400 horses and a 114-room dormitory for backstretch personnel.

We have a saddling paddock and our stable area has barns sufficient to accommodate 1,400 horses and a 114-room dormitory for backside personnel.

We have a state-of-the-art equine medical center and quarantine barns on the backside area of Churchill Downs Racetrack which reinforces our ongoing commitment to equine safety and supports our long-term international growth strategy.

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We can reacquire the facility at any time for $1.00 subject to the terms of the lease.

In July 2021, we announced three major multi-year capital investments to transform key areas of Churchill Downs Racetrack:

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

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.

Since 2021, we have completed several major multi-year capital investments at Churchill Downs Racetrack:

The Homestretch Club, the First Turn Experience, the Jockey Club Suites renovation, and the Paddock Project.

These investments transformed key areas of Churchill Downs Racetrack that enhance the experience for our guests.

The Paddock Project was completed for the 150th running of the Kentucky Derby.

The redesigned area improved the flow of guests throughout the paddock.

The Paddock Project created 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 providing 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 Company is also investing up to $85 million to renovate the Starting Gate Pavilion and Courtyard to enhance the existing grandstand and provide improved amenities for the 151st Kentucky Derby in May 2025.

Historical Racing Properties

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

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

State Property City/ Location Floor Space (Sq.

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

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

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

Kentucky Derby City Gaming & Hotel Louisville, Kentucky 55,000 1,270 ü

Kentucky Derby City Gaming Downtown Louisville, Kentucky 43,000 450 ü

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Kentucky Oak Grove Southwestern Kentucky 180,000 1,240 ü

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

Kentucky Marshall Yards (b)

Southwestern Kentucky 9,000 250 ü

Kentucky Ellis Park Western Kentucky 40,000 300 ü

Kentucky Owensboro (c)

Western Kentucky 24,000 600 ü

New Hampshire Chasers (d)

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

Virginia Colonial Downs / Rosie's New Kent / Central Virginia 127,000 490 N/A

Virginia Rosie's (e)

Richmond / Central Virginia 54,000 1,200 N/A

Virginia Roseshire (f)

Henrico County / Central Virginia 7,000 175 N/A

Virginia Rosie's Dumfries / Northern Virginia 19,000 150 N/A

Virginia The Rose (d)

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

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

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

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Total 765,000 10,405

(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 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.

(a) The Company's retail sports betting business is included in the Wagering Services and Solutions segment.

(b) The Company plans to open Marshall Yards Racing & Gaming in the first quarter of 2026.

(d) The Company plans to build a new charitable gaming facility to accommodate HRMs and table games.

(e) The Company plans to expand Rosie's Richmond HRM venue to accommodate a total of 1,200 HRMs in the third quarter of 2025.

(f) The Company plans to open the Roseshire in Henrico County in the fourth quarter of 2025.

Derby City Gaming & Hotel ("Derby City Gaming") opened in September 2018 in Louisville, Kentucky.

Derby City Gaming is a state-of-the-art HRM facility located at the Churchill Downs Racetrack auxiliary training facility and has a center bar with large format televisions, two food venues, an open-air gaming patio, and retail sports betting.

Derby City Gaming was expanded in the second quarter of 2023.

The expansion included a 123-room hotel, a VIP gaming area, a new sports bar, a stage for live entertainment, and an upscale-casual restaurant and bar.

Derby City Gaming Downtown ("DCG Downtown") opened in December 2023 in downtown Louisville, Kentucky.

DCG Downtown has a gaming area, a main-level sports bar with a stage for live entertainment, retail sports betting, a premium bourbon bar, and an elegant wine lounge for guests, including locals, tourists, and convention attendees.

Northern Kentucky

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").

Newport Racing & Gaming ("Newport") opened in October 2020 and is located within three miles of Cincinnati, Ohio.

Newport is an HRM entertainment venue that includes a simulcast area, food and beverage offerings, and retail sports betting.

Turfway Park Racing & Gaming ("Turfway Park") opened in September 2022 in Northern Kentucky.

Turfway Park is a state-of-the-art live thoroughbred racing and HRM entertainment venue with an event center, food and beverage offerings, and retail sports betting.

Southwestern Kentucky

Oak Grove Racing, Gaming & Hotel ("Oak Grove") opened in 2020 and is located approximately one-hour north of Nashville, Tennessee.

Oak Grove is a premier state-of-the-art live harness racing and HRM entertainment venue with a 128-room hotel, a simulcast center, event center, an amphitheater, recreational vehicle park, equestrian center, and retail sports betting.

Marshall Yards Racing & Gaming ("Marshall Yards") is expected to open in the first quarter 2026 in Calvert City, Kentucky.

The new state-of-the-art HRM entertainment venue will have 250 HRMs, a sports bar, retail sportsbook, and a simulcast center.

Western Kentucky

Ellis Park Racing & Gaming ("Ellis Park") was acquired by the Company in September 2022 and is located five miles from Evansville, Indiana.

Ellis Park is a live thoroughbred racing and HRM entertainment venue with food and beverage offerings and retail sports betting.

Owensboro Racing & Gaming ("Owensboro") opened in February 2025 in Owensboro, Kentucky with 600 HRMs, a retail sportsbook, simulcast wagering, and multiple food and beverage offerings.

Colonial Downs Racetrack ("Colonial Downs") and six historical racing entertainment venues across Virginia were acquired by the Company in November 2022.

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.

Colonial Downs conducts approximately 30 live race days each year with plans to increase up to 50 live race days per year.

The Company has also created the Virginia Derby to be held in March 2025 as a qualifying race to the Kentucky Derby.

Rosie's Emporia was opened in September 2023 in Emporia, Virginia with 150 HRMs and a restaurant and bar.

The Rose Gaming Resort ("The Rose") was opened in November 2024 in Dumfries, Virginia with a 102-room hotel, eight food and beverage options, and 1,650 HRMs.

Rosie’s Richmond is located in Richmond, Virginia and features 750 HRMs, a simulcast wagering area, food & beverage offerings, and a center bar.

Rosie’s Richmond will be expanded by the third quarter of 2025 to add an additional 450 HRMs.

Rosie’s Hampton is located in Hampton, Virginia and features 700 HRMs, a simulcast wagering area, and a food & beverage outlet.

Roseshire in Henrico County is expected to open in the fourth quarter of 2025 as a state-of-the-art HRM entertainment venue in Henrico County, Virginia.

Roseshire will open with 175 HRMs.

New Hampshire

On September 2, 2022, the Company completed the acquisition of Chasers Poker Room ("Chasers") located in Salem, New Hampshire.

Chasers is a charitable gaming facility located approximately 30 miles from Boston, Massachusetts, that offers poker and a variety of table games.

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

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;

and provides the Bloodstock Research Information Services platform for horse racing statistical data.

Chasers Poker Room ("Chasers") was acquired in 2022 and is in Salem, New Hampshire.

Chasers is a charitable gaming facility that offers poker and a variety of table games.

Wagering Services and Solutions

The Wagering Services and Solutions segment includes the revenue and expenses from pari-mutuel wagers through TwinSpires, our retail and online sports betting business, United Tote Company ("United Tote"), and Exacta Systems, LLC ("Exacta").

TwinSpires is an advance deposit wagering ("ADW") business that operates the online horse racing wagering business for TwinSpires.com, BetAmerica.com, and other white-label platforms, facilitates high dollar wagering by certain customers, and provides the Bloodstock Research Information Services platform for horse racing statistical data.

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

TwinSpires is headquartered in Louisville, Kentucky.

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.

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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.

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

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, including FanDuel and DraftKings, and we earn commissions from white label ADW products and services.

Under these arrangements, we typically provide an ADW platform and related operational services while the third party typically provides the brand, marketing, and limited customer functions.

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 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.

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.

Our sports betting business includes the results of our retail sportsbooks 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.

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

United Tote provides totalisator services which accumulate wagers, calculate payoffs, and displays wagering data to patrons who wager on horse races.

United Tote provides totalisator services which accumulate wagers, calculate payoffs, and display wagering data to patrons who wager on horse races.

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, 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.

In April 2024, the Company completed the sale of 49% of United Tote, a wholly owned subsidiary of CDI, to NYRA Content Management Solutions, LLC ("NYRA"), a subsidiary of the New York Racing Association, Inc.

Exacta was acquired by the Company on August 22, 2023.

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

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

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, 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:

The following table summarizes key information regarding our gaming properties:

State Property Acres Casino Space (Sq.

ft.) Slots and Video Lottery Terminals (a)

Table Games Hotel Rooms Retail Sports Book (b)

Table Games Hotel Rooms Retail Sportsbook (b)

Florida Calder Casino 54 106,000 1,070 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

Indiana Terre Haute Casino Resort 48 36,000 1,040 36 122 ü

Iowa Hard Rock Iowa 15 41,000 670 25 54 ü

Louisiana Fair Grounds Race Course and Slots and Video Services LLC 145 33,000 2,040 N/A N/A ü

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(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.

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

Wholly owned gaming properties

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Calder offers two dining facilities and an entertainment venue.

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 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, 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.

Calder is located on 54 acres of land, and the Company may sell 15-20 acres of this land in the future for retail development.

The Terre Haute Casino Resort ("Terre Haute") gaming entertainment venue was opened in April 2024 and a luxury hotel was opened in May 2024 in Terre Haute, Indiana.

Terre Haute has 1,040 slot machines, 36 table games, a state-of-the-art sportsbook, and offers regionally inspired food and beverage amenities.

The Company acquired Hard Rock Hotel and Casino in Sioux City, Iowa ("Hard Rock Iowa") in November 2022, which is a gaming facility and hotel with food and beverage offerings, a retail sportsbook, and entertainment venues.

Fair Grounds Race Course & Slots ("Fair Grounds") is located in New Orleans, Louisiana.

Fair Grounds is a gaming facility and racecourse with a bar, simulcast facility, dirt and turf track, and 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 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.

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

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

Fair Grounds also owns and operates 15 OTBs, 13 of which have over 500 HRMs.

Video Services LLC ("VSI") is the owner and operator of video poker machines in 13 of those OTBs in Louisiana.

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

Ocean Downs Casino and Racetrack ("Ocean Downs") is located in Berlin, Maryland.

Ocean Downs is a gaming facility with several dining options, a retail sportsbook, and a racetrack that conducts approximately 45 live harness racing days each year.

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

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

Del Lago Resort and Casino ("del Lago") was acquired by the Company in November 2022 and is located in Waterloo, New York.

Del Lago is a gaming facility and a hotel with several dining options and a retail sportsbook.

Presque Isle Downs and Casino ("Presque Isle") is located in Erie, Pennsylvania.

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

Equity Investments

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 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.

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.

The Company has a 61.3% equity ownership in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Casino Des Plaines ("Rivers Des Plaines"), located in Des Plaines, Illinois.

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

MVG is a gaming entertainment venue with a harness racetrack, a racing simulcast center, multiple food and drink offerings, and a retail sportsbook.

We have aggregated our captive insurance company that was established in April 2024 as well as certain corporate operations in All Other to reconcile to consolidated results.

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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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 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.

Wagering Services and Solutions

TwinSpires 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.

Our 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.

market, and other forms of legal and illegal sports betting and iGaming operations.

Exacta competes with HRM and other central determinant systems providers for casino and racino operators, players, and third-party game content providers.

Our Gaming properties operate in highly competitive environments and primarily compete for customers with other casinos in the surrounding regional gaming markets.

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Human Capital

We believe our human capital is material to our operations and core to the long-term success of our Company.

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, 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, 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.

Diversity and Inclusion

We believe that a diverse workforce fosters innovation and cultivates a high-performance culture that leverages the unique perspectives of every team member to profitably grow our businesses.

The Company’s Board of Directors and executive management team includes diverse individuals based on gender and race.

The Company benefits from the diverse experiences of our directors and management that individually and collectively create a high-performance culture focused on executing our strategic priorities to protect and grow our businesses effectively and efficiently.

We believe diversity and inclusion helps the Company attract the best talent to grow our businesses and enables our businesses to attract and delight customers and consumers.

The Kentucky Derby is a pillar of our community that provides the opportunity for our team members and the community to raise significant funding for charities that support important aspects of our broader communities including fostering diversity and inclusion, food, shelter, education, and health related non-profits.

The Company also provides donations to non-profit organizations that support these initiatives within our communities.

We believe our people are essential to our operations and fundamental to the long-term success of our Company.

Our focus is on attracting innovative and collaborative team members who are eager to develop their skills within a dynamic and growing portfolio of businesses dedicated to delivering exceptional experiences for our guests.

As of December 31, 2024, we had approximately 8,870 team members, including 6,480 that are full-time.

Our highest level of seasonal employment occurs in the second quarter, coinciding with the Kentucky Derby.

As of the same date, approximately 840 full-time team members were covered by 12 collective bargaining agreements.

We have not experienced any material operational disruptions due to labor disputes.

Talent Acquisition, Development and Retention

We invest in attracting, developing, and retaining our team members.

Our philosophy is to communicate a clear purpose and strategy, set challenging goals, drive accountability, continuously assess, develop, and advance talent, and to embrace a leadership-driven talent strategy.

Our Company enables team members to grow in their current roles as well as to have opportunities to build new skills in other parts of the Company.

We review talent and succession plans with our Chief Executive Officer and Board of Directors periodically throughout the year.

The process focuses on accelerating talent development, strengthening succession pipelines, and advancing diversity in gender, race, and experience.

We are committed to attracting, developing, and retaining top talent.

Our approach emphasizes a clear purpose and strategy, setting ambitious goals, fostering accountability, continuously assessing and advancing talent, and driving a leadership-led culture of growth.

We provide opportunities for team members to expand their expertise within their current roles while also encouraging skill development across different areas of the Company.

Talent reviews and succession planning are conducted regularly with our Chief Executive Officer and Board of Directors, with a focus on accelerating career development, strengthening leadership pipelines, and fostering a breadth of perspectives and experiences within our workforce.

Compensation, Benefits, Safety and Wellness

We strive to offer market competitive salaries and wages for our team members, and we offer comprehensive health and retirement benefits to eligible employees.

Our core health and welfare benefits are supplemented with specific programs to manage or improve common health conditions and to provide a variety of voluntary benefits and paid time away from work programs.

We also provide several innovative programs designed to promote physical, emotional, and financial well-being.

Our commitment to the safety of our employees, customers, and community remains a top priority, and we have safety programs at all our properties to facilitate identification and implementation of safety practices.

We strive to offer competitive salaries and wages while providing comprehensive health and retirement benefits to eligible team members.

Our core health and welfare offerings are supplemented with targeted programs designed to manage or improve common health conditions, along with a variety of voluntary benefits and paid time-off programs.

Additionally, we provide innovative initiatives aimed at promoting physical, emotional, and financial well-being.

The safety of our team members, customers, and community remains a top priority, and we have established safety programs across all our properties to ensure best practices are continuously identified and implemented.

Governmental Regulations and Potential Legislative Changes

We are subject to various federal, state, local, and international laws and regulations that affect our businesses.

The ownership, operation, and management of our Live and Historical Racing, TwinSpires, and Gaming segments are subject to regulation under the laws and regulations of each of the jurisdictions in which we operate.

The ownership, operation, and management of our Live and Historical Racing, Wagering Services and Solutions, and Gaming segments are subject to regulation under the laws and regulations of each of the jurisdictions in which we operate.

Our businesses and properties are also subject to legislative actions at both the federal and state level.

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In general, regulatory authorities perform background checks on all racetrack owners prior to granting the necessary operating licenses.

Horse owners, trainers, jockeys, drivers, stewards, judges, and backstretch personnel are also subject to licensing by governmental authorities.

Horse owners, trainers, jockeys, drivers, stewards, judges, and backside personnel are also subject to licensing by governmental authorities.

The total number of days on which each racetrack conducts live racing may fluctuate annually based on applications and approvals.

In Kentucky, horse racing racetracks and HRM facilities are subject to the licensing and regulation of the Kentucky Horse Racing Commission ("KHRC").

Licenses to conduct live thoroughbred and standardbred racing meets, to participate in simulcasting, to operate HRM facilities, and to accept advance deposit wagers from Kentucky residents are approved annually by the KHRC based upon applications submitted by the racetracks in Kentucky.

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.

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

In Louisiana, the 2021 Historical Horse Racing Act (the "2021 HHR Act") allows off-track betting facilities ("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 19th Judicial District Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including our Fair Grounds Race Course and Slots property, alleging that the 2021 HHR Act is unconstitutional to the extent it purports to permit historical racing in a parish without a referendum.

On June 8, 2023, plaintiffs filed a motion for summary judgment on the constitutional issues raised in their complaint and a hearing was conducted on September 11, 2023.

On February 23, 2024, the judge issued a ruling in favor of plaintiffs granting summary judgment stating that:

(i) historical horseracing is a new form of gaming not specifically authorized by law prior to 1996;

(ii) historical horseracing may not be conducted in any parish of the state unless voters approve it through referendum;

and (iii) the 2021 HHR Act that authorized historical horseracing is unconstitutional.

The summary judgment, which was certified as final for purposes of appeal, was entered on March 18, 2024, and the Company, along with other interested parties including the Louisiana Racing Commission, filed a joint motion for a suspensive appeal, which was entered on March 26, 2024.

The suspensive appeal allows the continued operation of HHR during the pendency of the appeal before the Louisiana Supreme Court.

The case was lodged in the Louisiana Supreme Court on August 7, 2024 and the Company, and other appellants, including the Louisiana Attorney General on behalf of the Louisiana Racing Commission, filed opening briefs on October 9, 2024.

Oral arguments occurred on January 27, 2025.

The Company intends to vigorously defend the constitutionality of the HHR Act.

As of December 31, 2024, 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.

TwinSpires Regulations and Potential Legislative Changes

Wagering Services and Solutions Regulations and Potential Legislative Changes

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.

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

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

As of December 31, 2024, the Company is operational in ten states for retail sports betting.

Gaming Regulations and Potential Legislative Changes

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Criteria used in determining whether to grant a license to conduct gaming operations, while varying between jurisdictions, generally include consideration of factors such as the good character, honesty, and integrity of the applicant;

the financial stability, integrity, and responsibility of the applicant, including whether the operation is adequately capitalized in the state and exhibits the ability to maintain adequate insurance levels;

the financial stability, integrity, and responsibility of the

applicant, including whether the operation is adequately capitalized in the state and exhibits the ability to maintain adequate insurance levels;

the quality of the applicant’s gaming facilities;

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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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We are required periodically to submit detailed financial and operating reports and furnish any other information that gaming authorities may require.

Under federal law, we are required to record and submit detailed reports of currency transactions involving greater than $10,000 at our gaming facilities and racetracks as well as any suspicious activity that may occur at such facilities.

Under federal law, we are required to record and submit detailed reports of currency transactions

greater than $10,000 at our gaming facilities and racetracks as well as any suspicious activity that may occur at such facilities.

Failure to comply with these requirements could result in fines or cessation of operations.

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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