Churchill Downs Inc 10-Q

ITEM 1. FINANCIAL STATEMENTS CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (in millions, except per common share data) 2025 2024 2025 2024 Net revenue: Live and Historical Racing $ 300.0 a $ 247.5 $ 1,082.4 $ 957.3 Wagering Services and Solutions 118.0 111.3 383.3 369.6 Gaming 265.0 269.7 794.2 783.1 All Other — — 0.1 0.1 Total net revenue 683.0 628.5 2,260.0 2,110.1 Operating expense: Live and Historical Racing 205.6 171.3 651.4 549.9 Wagering Services and Solutions 77.1 72.3 235.1 229.5 Gaming 191.1 194.8 574.5 561.7 All Other 4.9 4.5 13.1 10.2 Selling, general and administrative expense 59.3 59.8 174.7 172.0 Asset impairments, net 45.1 3.9 47.5 3.9 Transaction expense, net 1.9 ( 4.0 ) 3.4 0.7 Total operating expense 585.0 502.6 1,699.7 1,527.9 Operating income 98.0 125.9 560.3 582.2 Other (expense) income: Interest expense, net ( 75.6 ) ( 73.1 ) ( 222.1 ) ( 217.0 ) Equity in income of unconsolidated affiliates 35.0 33.4 105.4 108.9 Miscellaneous, net 3.8 ( 0.1 ) 5.5 8.1 Total other (expense) income ( 36.8 ) ( 39.8 ) ( 111.2 ) ( 100.0 ) Income from operations before provision for income taxes 61.2 86.1 449.1 482.2 Income tax provision ( 22.0 ) ( 19.9 ) ( 115.1 ) ( 125.4 ) Net income 39.2 66.2 334.0 356.8 Net income attributable to noncontrolling interests 1.1 0.8 2.3 1.7 Net income attributable to Churchill Downs Incorporated $ 38.1 $ 65.4 $ 331.7 $ 355.1 Net income attributable to Churchill Downs Incorporated per common share data: Basic net income $ 0.54 $ 0.87 $ 4.59 $ 4.78 Diluted net income $ 0.54 $ 0.86 $ 4.55 $ 4.73 Weighted average shares outstanding: Basic 70.3 73.9 71.9 74.0 Diluted 71.0 74.6 72.5 74.6 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 3 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions) September 30, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 180.5 $ 175.5 Restricted cash 88.0 77.2 Accounts receivable, net 89.7 98.7 Income taxes receivable — 14.5 Other current assets 56.7 46.4 Total current assets 414.9 412.3 Property and equipment, net 2,925.5 2,874.9 Investment in and advances to unconsolidated affiliates 674.9 661.2 Goodwill 900.2 900.2 Other intangible assets, net 2,517.8 2,409.0 Other assets 21.5 18.3 Total assets $ 7,454.8 $ 7,275.9 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 194.0 $ 180.3 Accrued expenses and other current liabilities 411.6 402.0 Income taxes payable 28.0 — Current deferred revenue 27.8 52.9 Current maturities of long-term debt 63.1 63.1 Dividends payable 0.7 31.0 Total current liabilities 725.2 729.3 Long-term debt, net of current maturities and loan origination fees 1,963.2 1,767.9 Notes payable, net of debt issuance costs 3,079.9 3,076.2 Non-current deferred revenue 18.5 20.0 Deferred income taxes 490.8 432.7 Other liabilities 98.1 146.5 Total liabilities 6,375.7 6,172.6 Commitments and contingencies Redeemable noncontrolling interest 44.2 19.7 Shareholders' equity: Preferred stock — — Common stock — — Retained earnings 1,035.9 1,084.6 Accumulated other comprehensive loss ( 1.0 ) ( 1.0 ) Total Churchill Downs Incorporated shareholders' equity 1,034.9 1,083.6 Total liabilities and shareholders' equity $ 7,454.8 $ 7,275.9 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 4 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity (in millions) Shares Amount Balance, December 31, 2024 73.5 $ — $ 1,084.6 $ ( 1.0 ) $ 1,083.6 Net income attributable to Churchill Downs Incorporated 76.7 76.7 Issuance of common stock 0.1 — Repurchase of common stock ( 0.8 ) ( 1.0 ) ( 88.4 ) ( 89.4 ) Taxes paid related to net share settlement of stock awards ( 3.9 ) ( 3.9 ) Stock-based compensation 4.9 4.9 Other ( 0.2 ) ( 0.2 ) Balance, March 31, 2025 72.8 — 1,072.7 ( 1.0 ) 1,071.7 Net income attributable to Churchill Downs Incorporated 216.9 216.9 Repurchase of common stock ( 2.6 ) ( 5.3 ) ( 245.1 ) ( 250.4 ) Taxes paid related to net share settlement of stock awards ( 0.1 ) ( 0.1 ) Stock-based compensation 5.4 5.4 Other ( 1.9 ) ( 1.9 ) Balance, June 30, 2025 70.2 — 1,042.6 ( 1.0 ) 1,041.6 Net income attributable to Churchill Downs Incorporated 38.1 38.1 Issuance of common stock 0.1 5.0 5.0 Repurchase of common stock ( 0.5 ) ( 12.6 ) ( 40.9 ) ( 53.5 ) Taxes paid related to net share settlement of stock awards ( 0.1 ) ( 0.1 ) Stock-based compensation 7.7 7.7 Other ( 3.9 ) ( 3.9 ) Balance, September 30, 2025 69.8 $ — $ 1,035.9 $ ( 1.0 ) $ 1,034.9 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 5 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity (in millions) Shares Amount Balance, December 31, 2023 74.5 $ — $ 894.5 $ ( 0.9 ) $ 893.6 Net income attributable to Churchill Downs Incorporated 80.4 80.4 Issuance of common stock 0.3 — Repurchase of common stock ( 1.2 ) ( 7.2 ) ( 138.5 ) ( 145.7 ) Taxes paid related to net share settlement of stock awards ( 0.1 ) ( 7.6 ) ( 7.6 ) Stock-based compensation 7.2 7.2 Other ( 1.0 ) ( 1.0 ) Balance, March 31, 2024 73.5 — 827.8 ( 0.9 ) 826.9 Net income attributable to Churchill Downs Incorporated 209.3 209.3 Repurchase of common stock ( 0.1 ) ( 8.9 ) ( 4.1 ) ( 13.0 ) Taxes paid related to net share settlement of stock awards ( 0.2 ) ( 0.2 ) Stock-based compensation 8.9 8.9 Other ( 0.9 ) ( 0.1 ) ( 1.0 ) Balance, June 30, 2024 73.4 — 1,031.9 ( 1.0 ) 1,030.9 Net income attributable to Churchill Downs Incorporated 65.4 65.4 Issuance of common stock 0.2 4.2 4.2 Repurchase of common stock ( 0.1 ) ( 9.0 ) ( 9.0 ) Taxes paid related to net share settlement of stock awards ( 0.1 ) ( 0.1 ) Stock-based compensation 7.1 7.1 Other ( 0.5 ) ( 1.0 ) ( 1.5 ) Balance, September 30, 2024 73.5 $ 1.7 $ 1,096.3 $ ( 1.0 ) $ 1,097.0 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 6 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, (in millions) 2025 2024 Cash flows from operating activities: Net income $ 334.0 $ 356.8 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 173.5 145.7 Distributions from unconsolidated affiliates 91.7 113.8 Equity in income of unconsolidated affiliates ( 105.4 ) ( 108.9 ) Stock-based compensation 18.2 23.2 Deferred income taxes 58.1 29.6 Asset impairments 87.5 3.9 Gain on settlement of liability ( 40.0 ) — Amortization of operating lease assets 4.8 4.1 Other 8.0 9.1 Changes in operating assets and liabilities: Income taxes 41.6 17.1 Deferred revenue ( 26.6 ) ( 38.1 ) Other assets and liabilities 28.4 84.8 Net cash provided by operating activities 673.8 641.1 Cash flows from investing activities: Capital maintenance expenditures ( 52.9 ) ( 49.8 ) Capital project expenditures ( 171.7 ) ( 367.8 ) Acquisition of gaming rights, net of cash acquired ( 185.3 ) — Other ( 11.5 ) 1.8 Net cash used in investing activities ( 421.4 ) ( 415.8 ) Cash flows from financing activities: Proceeds from borrowings under long-term debt obligations 947.7 750.4 Repayments of borrowings under long-term debt obligations ( 753.6 ) ( 757.5 ) Payment of dividends ( 30.2 ) ( 28.7 ) Repurchase of common stock ( 395.8 ) ( 158.7 ) Taxes paid related to net share settlement of stock awards ( 4.1 ) ( 10.6 ) Debt issuance costs ( 0.3 ) ( 2.5 ) Change in bank overdraft ( 1.7 ) ( 7.5 ) Other 1.4 ( 1.6 ) Net cash used in financing activities ( 236.6 ) ( 216.7 ) Cash flows from discontinued operations: Operating activities of discontinued operations — 1.0 Net increase in cash, cash equivalents and restricted cash 15.8 9.6 Cash, cash equivalents and restricted cash, beginning of period 252.7 221.8 Cash, cash equivalents and restricted cash, end of period $ 268.5 $ 231.4 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 7 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) Nine Months Ended September 30, (in millions) 2025 2024 Supplemental disclosures of cash flow information: Cash paid for interest $ 192.6 $ 205.3 Cash paid for income taxes 16.8 81.8 Cash received from income tax refunds 1.4 4.1 Schedule of non-cash operating, investing and financing activities: Property and equipment additions included in accounts payable and accrued expenses $ 21.2 $ 55.2 Fair value of noncontrolling interest recognized in connection with asset acquisition 20.4 — Right-of-use assets obtained in exchange for lease obligations in operating leases 20.8 4.2 Right-of-use assets obtained in exchange for lease obligations in finance leases — 3.6 Repurchase of common stock included in accrued expense and other current liabilities 0.5 9.0 Deferred payments for acquisition of business included in other liabilities — 1.2 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 8 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 1. DESCRIPTION OF BUSINESS Basis of Presentation Churchill Downs Incorporated (the "Company" or "CDI") financial statements are presented in conformity with the requirements of this Quarterly Report on Form 10-Q and consequently do not include all of the disclosures normally required by U.S. generally accepted accounting principles ("GAAP") or those normally made in our Annual Report on Form 10-K. The December 31, 2024 Condensed Consolidated Balance Sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The following information is unaudited. All per share amounts assume dilution unless otherwise noted. This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024. In the opinion of management, all adjustments necessary for a fair statement of this information have been made, and all such adjustments are of a normal, recurring nature. In August 2025, the Company completed the acquisition of 90 % of the outstanding equity interests of PPE Casino Resorts NH Holdings, LLC in Salem, New Hampshire ("Casino Salem"). The Company will assume responsibility for the development of a charitable gaming, entertainment and dining destination at this location. Refer to Note 3, Acquisitions, and Note 11, Redeemable Noncontrolling Interest, for further information on the transaction. In April 2024, the Company closed on the sale of 49 % of the United Tote Company ("United Tote"), a wholly-owned subsidiary of CDI, to NYRA Content Management Solutions, LLC ("NYRA"), a subsidiary of the New York Racing Association, Inc. Refer to Note 11, Redeemable Noncontrolling Interest, for further information on the transaction. We conduct our business through three reportable segments: 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 in the accompanying Condensed Consolidated Statements of Comprehensive Income. 2. RECENT ACCOUNTING PRONOUNCEMENTS Recent Accounting Pronouncements - effective in 2025 or thereafter In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s ("SEC") Disclosure Update and Simplification Initiative, to amend certain disclosure and presentation requirements for a variety of topics within FASB's Accounting Standards Codification ("ASC"). These amendments align the requirements in the ASC regarding the removal of certain disclosure requirements set out in Regulation S-X and Regulation S-K, announced by the SEC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or on June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. The additional disclosure requirements from this ASU will be incorporated into the Company's 2025 Annual Report on Form 10-K. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures. In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. Under ASU 2024-03, a public entity would be required to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses. This standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements and related disclosures. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 9 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 3. ACQUISITIONS Casino Salem On August 27, 2025, the Company completed its acquisition of 90 % of Casino Salem (the "Salem Transaction"), which was treated as an asset acquisition because substantially all the value of the gross assets acquired was concentrated in the gaming rights. In conjunction with the acquisition, the Company recorded a $ 196.6 million indefinite-lived gaming rights intangible, which represented the fair value of the gaming rights at the date of acquisition. The fair value of the gaming rights acquired in the transaction was determined using the Greenfield Method, which is an income approach methodology that calculates the present value of the gaming rights intangible asset based on a projected cash flow stream. This method assumes that the gaming rights intangible asset provides the opportunity to develop a gaming facility in a specified region, and that the present value of the projected cashflows is a result of the realization of advantages contained in these rights. Under this methodology, the acquirer is expected to absorb all start-up costs, as well as incur all expenses pertaining to the acquisition and/or the creation of all tangible and intangible assets. The estimated future revenue, future operating expenses, start-up costs, and discount rate were the primary inputs in the valuation. The gaming rights intangible asset was assigned an indefinite useful life based on the Company's expected use of the asset and determination that no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of the gaming rights. The Company has not included other disclosures regarding the Salem Transaction because the acquisition is immaterial to our business. 4. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill was $ 900.2 million as of September 30, 2025 and December 31, 2024. We performed our annual goodwill impairment analysis as of April 1, 2025, and no adjustment to the carrying value of goodwill was required. We assessed goodwill for impairment by performing qualitative or quantitative analyses for each reporting unit. We concluded that the fair values of our reporting units exceeded their carrying values, and therefore no impairments were identified. Other intangible assets are comprised of the following: September 30, 2025 December 31, 2024 (in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived intangible assets $ 95.9 $ ( 39.7 ) $ 56.2 $ 95.9 $ ( 34.2 ) $ 61.7 Indefinite-lived intangible assets 2,461.6 2,347.3 Total $ 2,517.8 $ 2,409.0 The Company is continuing to monitor the current economic conditions and the impacts on the results of operations of Presque Isle Downs and Casino due to historical impairments recorded in prior periods related to the gaming rights and trademark. Future economic conditions could have a negative impact on the estimates and assumptions utilized in our asset impairment assessments. These potential impacts could increase the risk of a future impairment of assets at Presque Isle. We performed our annual indefinite-lived intangible assets impairment analysis as of April 1, 2025. We assessed our indefinite-lived intangible assets for impairment by performing qualitative or quantitative analyses for each asset. Based on the results of these analyses, no indefinite-lived intangible asset impairments were identified in connection with our annual impairment testing. Chasers Poker Room Impairment During the third quarter of 2025, the Company concluded that the completion of the Salem Transaction qualifies as a trigger event for impairment testing related to the Chasers Poker Room ("Chasers") indefinite-lived gaming rights intangible. At the time the Company acquired Chasers, the valuation of the gaming rights contemplated a future expansion of the existing operations in Salem, New Hampshire. Given the completion of the Salem Transaction, the Company now intends to build Casino Salem and currently does not plan to expand Chasers. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 10 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Because the Company does not currently intend to expand Chasers, the Company settled an outstanding liability owed to the former owners of Chasers, related to the Chasers' gaming rights, in the amount of $ 10.0 million. The settlement of the noncurrent liability resulted in a gain of $ 40.0 million in the third quarter of 2025. Given the completion of the Salem Transaction and the settlement of the liability related to the Chasers' gaming rights, the Company evaluated and subsequently updated the projected cash flows and discount rate related to the Chasers' gaming rights. The fair value of the Chasers' gaming rights intangible was determined using the Greenfield Method, an income approach methodology that calculates the present value based on a projected cash flow stream. This method assumes that the gaming rights intangible assets provide the opportunity to develop a casino or historical racing facility in a specified region, and that the present value of the projected cash flows are a result of the realization of advantages contained in these rights. Under this methodology, the acquirer is expected to absorb all start-up costs, as well as incur all expenses pertaining to the acquisition and/or the creation of all tangible and intangible assets. The estimated future revenue and operating expenses, start-up costs, and discount rates were the primary assumptions and estimates in the valuation of the gaming rights intangible. As a result of this assessment, the Company recognized a non-cash impairment charge of $ 85.1 million in the third quarter of 2025 for the entire value of the Chasers' gaming rights, which are included in the Live and Historical Racing segment. The $ 40.0 million gain on settlement of the noncurrent liability and the $ 85.1 million impairment charge of the gaming rights intangible are included in Asset impairments, net in the Condensed Consolidated Statements of Comprehensive Income. 5. INCOME TAXES The Company’s effective income tax rate was 35.9 % for the three months ended September 30, 2025, and was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes, increased future tax expenses from the remeasurement of deferred income tax liabilities related to New Hampshire and the acquisition of Casino Salem, and non-deductible officer’s compensation, partially offset by the excess tax benefit from restricted stock compensation distributed in the third quarter of 2025. The Company’s effective income tax rate of 25.6 % for the nine months ended September 30, 2025, and was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes and non-deductible officer’s compensation. On July 4, 2025, the United States enacted H.R. 1, a new federal tax and spending bill. Many of the tax provisions included in the bill are retroactive and will have a significant favorable impact on the Company’s current tax expense, primarily due to the permanent reinstatements of 100% bonus depreciation rules and a 30% of EBITDA-based interest expense deduction limitation. As a result of this change, the Company will begin utilizing the $ 91.2 million deferred tax asset related to interest expense previously subject to limitation. The expected reduction in cash paid taxes as a result of these new tax provisions will increase cash flow from operating activities. The Company’s effective income tax rate was 23.1 % for the three months ended September 30, 2024, and was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes, non-deductible officer’s compensation and other non-deductible expense, partially offset by the excess tax benefit from the payment of restricted stock compensation and the tax benefit from the expiration of the statute of limitations for certain unrecognized tax benefits. The Company’s effective income tax rate was 26.0 % for the nine months ended September 30, 2024, and was higher than the U.S. federal statutory rate of 21.0% primarily resulting from state income taxes and non-deductible officer’s compensation. 6. SHAREHOLDERS' EQUITY Stock Repurchase Programs On July 22, 2025, the Board of Directors of the Company approved a common stock repurchase program of up to $ 500.0 million (the "July 2025 Stock Repurchase Program"). The July 2025 Stock Repurchase Program includes and is not in addition to the $ 169.2 million previously remaining under the March 2025 Stock Repurchase Program. Share repurchases may be made at management’s discretion from time to time in the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. We had approximately $ 461.5 million of repurchase authority remaining under the July 2025 Stock Repurchase Program at September 30, 2025, based on trade date. On March 12, 2025, the Board of Directors of the Company approved a new common stock repurchase program of up to $ 500.0 million (the "March 2025 Stock Repurchase Program"). The March 2025 Stock Repurchase Program included and was not in addition to the $ 125.6 million remaining under the 2021 Stock Repurchase Program. As described above, the March 2025 Stock Repurchase Program has since been replaced by the July 2025 Stock Repurchase Program. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 11 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) During the three and nine months ended September 30, 2025 and 2024, we repurchased the following shares under our stock repurchase programs: Three Months Ended September 30, Nine Months Ended September 30, (in millions, except share data) 2025 2024 2025 2024 Repurchase Program Shares Aggregate Purchase Price Shares Aggregate Purchase Price Shares Aggregate Purchase Price Shares Aggregate Purchase Price July 2025 Stock Repurchase Program 373,282 $ 38.5 — $ — 373,282 $ 38.5 — $ — March 2025 Stock Repurchase Program 142,245 15.0 — — 3,294,447 330.8 — — 2021 Stock Repurchase Program — — 67,139 9.0 212,012 24.0 345,834 43.9 Total 515,527 $ 53.5 67,139 $ 9.0 3,879,741 $ 393.3 345,834 $ 43.9 The Duchossois Group Share Repurchase On January 2, 2024, the Company closed on an agreement, dated December 18, 2023, with an affiliate of The Duchossois Group ("TDG") to repurchase 1,000,000 shares of the Company’s common stock, for $ 123.75 per share in a privately negotiated transaction for an aggregate purchase price of $ 123.8 million. This represented a discount of 4.03 % to the closing price on December 15, 2023, of $ 128.95 . The repurchase of shares of common stock from TDG was approved by the Company's Board of Directors separately from and did not reduce the authorized amount remaining under any existing common stock repurchase programs. The repurchase of the shares was funded using available cash and borrowings under the Company’s senior secured credit facility. As of September 30, 2025 and December 31, 2024, we had $ 0.5 million and $ 3.0 million, respectively, accrued for the future cash settlement of executed repurchases of our common stock. 7. STOCK-BASED COMPENSATION PLANS On February 18, 2025, our Board of Directors approved the replacement of the Churchill Downs Incorporated 2016 Omnibus Stock Incentive Plan (the "2016 Plan") with a new plan, the Churchill Downs Incorporated 2025 Omnibus Stock and Incentive Plan (the "2025 Plan"). The 2025 Plan was approved by shareholders at the Company's 2025 Annual Meeting of Shareholders held on April 22, 2025, and no further awards will be granted under the 2016 Plan. We have stock-based employee compensation plans with awards outstanding under the 2016 Plan, the 2025 Plan, and the Executive Long-Term Incentive Compensation Plan, which was adopted pursuant to the 2016 Plan. Our total stock-based compensation expense, which includes expenses related to restricted stock awards ("RSAs"), restricted stock unit awards ("RSUs"), performance share unit awards ("PSUs"), and stock options associated with our employee stock purchase plan was $ 7.4 million and $ 18.2 million for the three months and nine months ended September 30, 2025 and $ 7.1 million and $ 23.2 million for the three months and nine months ended September 30, 2024, respectively. At September 30, 2025 and December 31, 2024, the Company had $ 9.0 million and $ 25.0 million, respectively, recorded as liability-classified awards, which are included in accrued expense and other liabilities in the accompanying Condensed Consolidated Balance Sheets. During the nine months ended September 30, 2025, the Company awarded RSUs to employees, as well as RSUs and PSUs to certain named executive officers ("NEOs"), and RSAs and RSUs to directors. The vesting criteria for the PSU awards granted in 2025 were based on a three-year service period with two performance conditions and a market condition related to relative total shareholder return ("TSR") consistent with prior year grants. The total compensation cost we will recognize under the PSUs is determined using the Monte Carlo valuation methodology, which factors in the value of the TSR market condition when determining the grant date fair value of the PSU. Compensation cost for each PSU is recognized during the performance and service period based on the probable achievement of the two performance criteria. The PSUs can be converted into shares of our common stock at the time the PSU award value is finalized. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 12 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) A summary of the RSAs, RSUs and PSUs granted during 2025 is presented below (units in thousands): Grant Year Award Type Number of Units Awarded (1) Vesting Terms 2025 RSU 161 Vest equally over three service periods ending in 2027 2025 PSU 87 Three -year performance and service period ending in 2027 2025 RSU 12 One -year service period ending in 2025 2025 RSA 2 One -year service period ending in 2025 (1) PSUs reflect the target number of units for the original PSU grant. 8. DEBT The following table presents our total debt outstanding: (in millions) September 30, 2025 December 31, 2024 Term Loan B-1 due 2028 $ 286.5 $ 288.8 Term Loan A due 2029 1,127.3 1,172.4 Revolver 619.0 377.5 2027 Senior Notes 600.0 600.0 2028 Senior Notes 700.0 700.0 2030 Senior Notes 1,200.0 1,200.0 2031 Senior Notes 600.0 600.0 Total debt 5,132.8 4,938.7 Current maturities of long-term debt ( 63.1 ) ( 63.1 ) Unamortized premium and deferred finance charges ( 26.6 ) ( 31.5 ) Total debt, net of current maturities and costs $ 5,043.1 $ 4,844.1 Credit Agreement At September 30, 2025, the Company’s senior secured credit facility (as amended from time to time, the "Credit Agreement") consisted of a $ 1.2 billion revolving credit facility (the "Revolver"), $ 286.5 million senior secured term loan B-1 (the "Term Loan B-1"), $ 1.1 billion senior secured term loan A (the "Term Loan A"), and $ 100.0 million swing line commitment. On July 3, 2024, the Company closed an amendment of the Credit Agreement to (i) extend the maturity date of the Revolver and Term Loan A from 2027 to 2029 subject to an earlier "springing maturity" if certain indebtedness in respect of outstanding notes or other material indebtedness having a maturity date prior to July 3, 2029, is not refinanced or extended to a date after July 3, 2029, at least 91 days prior to such other debt’s stated maturity date, and (ii) amend certain other provisions of the Credit Agreement. On February 14, 2025, the Company announced that it closed the seventh amendment of the Credit Agreement. The seventh amendment to the Credit Agreement (i) reduced the interest rate margin applicable to the Term Loan B-1 by 0.25 % from Secured Overnight Financing Rate ("SOFR") plus 200 basis points to SOFR plus 175 basis points, (ii) eliminated the 0.10 % credit spread adjustment previously applicable to the Term Loan B-1, and (iii) made certain other amendments to the Credit Agreement. The Term Loan B-1 requires quarterly payments of 0.25 % of the original $ 300.0 million balance and may be subject to additional mandatory prepayment from excess cash flow on an annual basis per the provisions of the Credit Agreement. The Revolver and Term Loan A bear interest at SOFR plus 10 basis points, plus a variable applicable margin which is determined by the Company's net leverage ratio. As of September 30, 2025, that applicable margin was 150 basis points which was based on the pricing grid in the Credit Agreement. The Company had $ 572.8 million available borrowing capacity, after consideration of $ 8.2 million in outstanding letters of credit, under the Revolver as of September 30, 2025. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 13 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) The Company is required to pay a commitment fee on the unused portion of the Revolver as determined by a pricing grid based on the consolidated total net secured leverage ratio of the Company. For the period ended September 30, 2025, the Company's commitment fee rate was 0.25 %. 2027 Senior Notes As of September 30, 2025, we had $ 600.0 million in aggregate principal amount of 5.500 % senior unsecured notes that mature on April 1, 2027 (the "2027 Senior Notes"). The 2027 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2019. The Company may redeem some or all of the 2027 Senior Notes at redemption prices set forth in the Indenture. 2028 Senior Notes As of September 30, 2025, we had a total of $ 700.0 million in aggregate principal amount of 4.750 % senior unsecured notes (the "2028 Senior Notes") maturing on January 15, 2028. The 2028 Senior Notes consist of $ 500.0 million notes issued at par and $ 200.0 million notes issued at 103.25 %. The 2028 Senior Notes were issued in a private offering to qualified institutional buyers, with interest payable in arrears on January 15th and July 15th of each year, commencing on July 15th, 2018. The 3.25 % premium is being amortized through interest expense, net over the term of the notes. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forth in the Indenture. 2030 Senior Notes As of September 30, 2025, we had $ 1.2 billion in aggregate principal amount of 5.750 % senior unsecured notes that mature on April 13, 2030 (the "2030 Senior Notes"). The 2030 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1st, 2022. The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the Indenture. 2031 Senior Notes As of September 30, 2025, we had $ 600.0 million in aggregate principal amount of 6.750 % senior unsecured notes that mature on April 25, 2031 (the "2031 Senior Notes"). The 2031 Senior Notes were issued at par in a private offering to qualified institutional buyers, with interest payable in arrears on May 1st and November 1st of each year, commencing on November 1st, 2023. The Company may redeem some or all of the 2031 Senior Notes at redemption prices set forth in the Indenture. 9. REVENUE FROM CONTRACTS WITH CUSTOMERS Performance Obligations As of September 30, 2025, our Live and Historical Racing segment had remaining performance obligations on contracts with a duration greater than one year relating to television rights, sponsorships, personal seat licenses, and admissions, with an aggregate transaction price of $ 247.1 million. The revenue we expect to recognize on these remaining performance obligations is $ 1.2 million for the remainder of 2025, $ 70.6 million in 2026, $ 55.6 million in 2027, and the remainder thereafter. As of September 30, 2025, our remaining performance obligations on contracts with a duration greater than one year in segments other than Live and Historical Racing were not material. Contract Assets and Contract Liabilities As of September 30, 2025 and December 31, 2024, contract assets were not material. As of September 30, 2025 and December 31, 2024, contract liabilities were $ 55.7 million and $ 81.5 million, respectively, which are included in current deferred revenue, non-current deferred revenue, and accrued expense in the accompanying Condensed Consolidated Balance Sheets. Contract liabilities primarily relate to the Live and Historical Racing segment and the decrease was primarily due to the recognition of previously deferred revenue related to the 151st Kentucky Derby. We recognized $ 2.2 million and $ 56.1 million of revenue during the three months and nine months ended September 30, 2025, respectively, which was included in the contract liabilities balance at December 31, 2024. We recognized $ 1.1 million and $ 74.1 million of revenue during the three months and nine months ended September 30, 2024, respectively, which was included in the contract liabilities balance at December 31, 2023. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 14 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Disaggregation of Revenue The Company has included its disaggregated revenue disclosures as follows: • For the Live and Historical Racing segment, revenue is disaggregated between Churchill Downs Racetrack and historical racing properties given that Churchill Downs Racetrack revenue primarily revolves around live racing events, while our other Live and Historical Racing properties' revenues primarily revolve around historical racing. This segment is also disaggregated by location given the geographic economic factors that affect the revenue of service offerings. Within the Live and Historical Racing segment, revenue is further disaggregated between live and simulcast racing, historical racing, racing event-related services, gaming, and other services. • For the Wagering Services and Solutions segment, revenue is disaggregated between live and simulcast racing, gaming, and other services. • For the Gaming segment, revenue is disaggregated by location given the geographic economic factors that affect the revenue of Gaming service offerings. Within the Gaming segment, revenue is further disaggregated between live and simulcast racing, historical racing, racing event-related services, gaming, and other services. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 15 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) We believe that these disclosures depict how the amount, nature, timing, and uncertainty of cash flows are affected by economic factors. The tables below present net revenue from external customers and intercompany revenue from each of our segments: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 2025 2024 Net revenue from external customers: Live and Historical Racing: Churchill Downs Racetrack $ 11.9 $ 11.7 $ 243.0 $ 242.8 Louisville 53.9 50.3 163.3 157.1 Northern Kentucky 26.4 23.4 84.3 73.9 Southwestern Kentucky 41.6 39.3 125.5 118.1 Western Kentucky 21.8 9.8 50.2 22.7 Virginia 139.7 110.0 405.0 333.1 New Hampshire 4.7 3.0 11.1 9.6 Total Live and Historical Racing $ 300.0 $ 247.5 $ 1,082.4 $ 957.3 Wagering Services and Solutions: $ 118.0 $ 111.3 $ 383.3 $ 369.6 Gaming: Florida $ 23.4 $ 23.8 $ 74.0 $ 76.4 Iowa 23.7 22.9 70.9 69.8 Indiana 33.3 32.4 97.5 66.3 Louisiana 26.1 32.0 102.6 113.4 Maine 28.9 27.7 80.9 81.3 Maryland 30.5 31.5 76.9 79.3 Mississippi 22.3 23.6 71.4 74.1 New York 48.0 46.8 139.0 138.3 Pennsylvania 28.8 29.0 81.0 84.2 Total Gaming $ 265.0 $ 269.7 $ 794.2 $ 783.1 All Other — — 0.1 0.1 Net revenue from external customers $ 683.0 $ 628.5 $ 2,260.0 $ 2,110.1 Intercompany net revenues: Live and Historical Racing $ 5.7 $ 4.9 $ 40.6 $ 34.2 Wagering Services and Solutions 9.2 7.4 28.1 23.1 Gaming 0.5 0.6 4.8 4.8 All Other 2.2 2.6 6.4 4.4 Eliminations ( 17.6 ) ( 15.5 ) ( 79.9 ) ( 66.5 ) Intercompany net revenue $ — $ — $ — $ — FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 16 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Three Months Ended September 30, 2025 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Total Segments All Other Total Net revenue from external customers Pari-mutuel: Live and simulcast racing $ 16.4 $ 86.7 $ 5.0 $ 108.1 $ — $ 108.1 Historical racing (a) 252.6 — — 252.6 — 252.6 Racing event-related services 4.1 — 0.1 4.2 — 4.2 Gaming (a) 3.4 4.7 230.3 238.4 — 238.4 Other (a) 23.5 26.6 29.6 79.7 — 79.7 Total $ 300.0 $ 118.0 $ 265.0 $ 683.0 $ — $ 683.0 Three Months Ended September 30, 2024 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Total Segments All Other Total Net revenue from external customers Pari-mutuel: Live and simulcast racing $ 15.2 $ 82.7 $ 5.0 $ 102.9 $ — $ 102.9 Historical racing (a) 205.9 — 9.3 215.2 — 215.2 Racing event-related services 5.0 — 1.4 6.4 — 6.4 Gaming (a) 3.1 4.4 224.3 231.8 — 231.8 Other (a) 18.3 24.2 29.7 72.2 — 72.2 Total $ 247.5 $ 111.3 $ 269.7 $ 628.5 $ — $ 628.5 (a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $ 15.2 million for the three months ended September 30, 2025 and $ 14.2 million for the three months ended September 30, 2024. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 17 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Nine Months Ended September 30, 2025 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Total Segments All Other Total Net revenue from external customers Pari-mutuel: Live and simulcast racing $ 81.2 $ 292.1 $ 20.0 $ 393.3 $ — $ 393.3 Historical racing (a) 741.5 — 13.7 755.2 — 755.2 Racing event-related services 177.8 — 1.0 178.8 — 178.8 Gaming (a) 9.7 12.6 669.8 692.1 — 692.1 Other (a) 72.2 78.6 89.7 240.5 0.1 240.6 Total $ 1,082.4 $ 383.3 $ 794.2 $ 2,259.9 $ 0.1 $ 2,260.0 Nine Months Ended September 30, 2024 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Total Segments All Other Total Net revenue from external customers Pari-mutuel: Live and simulcast racing $ 76.6 $ 277.9 $ 20.1 $ 374.6 $ — $ 374.6 Historical racing (a) 630.1 — 27.4 657.5 — 657.5 Racing event-related services 182.1 — 5.0 187.1 — 187.1 Gaming (a) 9.5 14.4 645.5 669.4 — 669.4 Other (a) 59.0 77.3 85.1 221.4 0.1 221.5 Total $ 957.3 $ 369.6 $ 783.1 $ 2,110.0 $ 0.1 $ 2,110.1 (a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in other revenue with a corresponding offset recorded as a reduction in historical racing pari-mutuel revenue for HRMs or gaming revenue for our casino properties. These amounts were $ 45.2 million for the nine months ended September 30, 2025 and $ 41.7 million for the nine months ended September 30, 2024. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 18 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 10. SUPPLEMENTAL BALANCE SHEET INFORMATION Accounts receivable, net Accounts receivable is comprised of the following: (in millions) September 30, 2025 December 31, 2024 Trade receivables $ 36.0 $ 37.3 Simulcast and online wagering receivables 35.3 40.2 Other receivables 25.1 26.1 96.4 103.6 Allowance for credit losses ( 6.7 ) ( 4.9 ) Total $ 89.7 $ 98.7 Other current assets Other current assets is comprised of the following: (in millions) September 30, 2025 December 31, 2024 Inventory $ 12.4 $ 11.6 Prepaid technology costs 8.5 6.4 Prepaid insurance and taxes 13.9 7.7 Other prepaid costs 19.3 16.0 Insurance deposits and other 2.6 4.7 Total $ 56.7 $ 46.4 Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: (in millions) September 30, 2025 December 31, 2024 Account wagering deposits liability $ 66.2 $ 63.1 Accrued salaries and related benefits 48.7 57.7 Purses payable 38.3 35.4 Accrued interest 75.3 48.2 Accrued fixed assets 19.6 42.7 Accrued gaming liabilities 35.7 35.3 Accrued insurance 13.4 13.1 Accrued property taxes 18.1 9.7 Current lease liabilities 8.7 8.7 Other 87.6 88.1 Total $ 411.6 $ 402.0 11. REDEEMABLE NONCONTROLLING INTEREST In April 2024, the Company closed on the sale of 49 % of United Tote, a wholly-owned subsidiary of CDI, to NYRA. NYRA's interest includes certain embedded redemption features, such as a put right, that are not exclusively within the Company’s control. NYRA's interest is treated as redeemable noncontrolling interest and is presented outside of permanent equity on the Company’s Condensed Consolidated Balance Sheets. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 19 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) In August 2025, the Company closed on the purchase of 90 % of Casino Salem, a joint venture with SL Salem, LLC and JPF Casino Enterprises, LLC (collectively, the "Casino Salem Minority Interest Holders"). The Casino Salem Minority Interest Holders' interests include certain embedded redemption features, such as put rights, that are not exclusively within the Company’s control. The Casino Salem Minority Interest Holders' interests are treated as redeemable noncontrolling interest and are not included in the permanent equity on the Company’s Condensed Consolidated Balance Sheets. The redeemable noncontrolling interest is initially accounted for at fair value and subsequently adjusted to the greater of the redemption value or the carrying value. Redeemable noncontrolling interest adjustments of carrying value to redemption value are reflected in retained earnings and are also included as an adjustment to income available to the Company’s shareholders in the calculation of earnings per share (See Note 15, Net Income Per Common Share Computations). The table below depicts changes in the Company’s redeemable noncontrolling interest balance. (in millions) Balance, December 31, 2023 $ — Redeemable noncontrolling interest initial measurement 14.4 Net income attributable to redeemable noncontrolling interest 2.3 Redemption value adjustment 3.0 Balance, December 31, 2024 19.7 Redeemable noncontrolling interest initial measurement 20.4 Net income attributable to redeemable noncontrolling interests 2.3 Redemption value adjustment 1.8 Balance, September 30, 2025 $ 44.2 12. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES Investments in and advances to unconsolidated affiliates as of September 30, 2025 and December 31, 2024, primarily consisted of interests in Rivers Casino Des Plaines ("Rivers Des Plaines") and Miami Valley Gaming and Racing ("MVG"). Rivers Casino Des Plaines The ownership of Rivers Des Plaines is comprised of the following: (1) the Company owns 61.3 %, (2) High Plaines Gaming, LLC ("High Plaines"), an affiliate of Rush Street Gaming, LLC, owns 36.0 %, and (3) Casino Investors, LLC owns 2.7 %. Both the Company and High Plaines have participating rights over Rivers Des Plaines, and both must consent to certain operating, investing and financing decisions. As a result, we account for Rivers Des Plaines using the equity method. As of September 30, 2025 , the net aggregate basis difference between the Company’s investment in Rivers Des Plaines and the amounts of the underlying equity in net assets was $ 833.1 million. Our investment in Rivers Des Plaines was $ 561.0 million and $ 547.1 million as of September 30, 2025 and December 31, 2024, respectively. The Company received distributions from Rivers Des Plaines of $ 56.7 million and $ 78.8 million for the nine months ended September 30, 2025 and 2024, respectively. Miami Valley Gaming and Racing The Company owns a 50 % interest in MVG and Delaware North Companies Gaming & Entertainment Inc. ("DNC") owns the remaining 50 % interest in MVG. Since both the Company and DNC have participating rights over MVG, and both must consent to certain operating, investing and financing decisions, we account for MVG using the equity method. Our investment in MVG was $ 113.9 million and $ 114.1 million as of September 30, 2025 and December 31, 2024, respectively. The Company received distributions from MVG of $ 35.0 million in each of the nine month periods ended September 30, 2025 and 2024. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 20 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Summarized Financial Results for our Unconsolidated Affiliates Summarized below are the financial results for our unconsolidated affiliates. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 2025 2024 Net revenue $ 210.6 $ 208.4 $ 631.9 $ 641.2 Operating and SG&A expense 133.2 132.2 398.3 399.3 Depreciation and amortization 5.8 6.8 17.9 20.1 Operating income 71.6 69.4 215.7 221.8 Interest and other, net ( 10.3 ) ( 11.1 ) ( 31.2 ) ( 33.5 ) Net income $ 61.3 $ 58.3 $ 184.5 $ 188.3 (in millions) September 30, 2025 December 31, 2024 Assets Current assets $ 106.9 $ 100.5 Property and equipment, net 319.4 325.6 Other assets, net 265.3 267.5 Total assets $ 691.6 $ 693.6 Liabilities and Members' Deficit Current liabilities $ 114.6 $ 89.9 Long-term debt 794.1 839.8 Other liabilities 0.5 1.7 Members' deficit ( 217.6 ) ( 237.8 ) Total liabilities and members' deficit $ 691.6 $ 693.6 13. FAIR VALUE OF ASSETS AND LIABILITIES We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate. Restricted Cash Our restricted cash accounts held in money market and interest-bearing accounts qualify for Level 1 in the fair value hierarchy, which includes unadjusted quoted market prices in active markets for identical assets. Debt The fair value of the Company’s 2031 Senior Notes, 2030 Senior Notes, 2028 Senior Notes, and 2027 Senior Notes are estimated based on unadjusted quoted prices for identical or similar liabilities in markets that are not active and as such are Level 2 measurements. The fair values of the Company's Term Loan B-1, Term Loan A, and Revolver under the Credit Agreement approximate the gross carrying value of the variable rate debt and as such are Level 2 measurements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 21 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) The carrying amounts and estimated fair values by input level of the Company's financial instruments are as follows: September 30, 2025 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Restricted cash $ 88.0 $ 88.0 $ 88.0 $ — $ — Financial liabilities: Term Loan B-1 284.8 286.5 — 286.5 — Term Loan A 1,122.5 1,127.3 — 1,127.3 — Revolver 619.0 619.0 — 619.0 — 2027 Senior Notes 598.4 597.8 — 597.8 — 2028 Senior Notes 699.3 690.6 — 690.6 — 2030 Senior Notes 1,189.5 1,198.4 — 1,198.4 — 2031 Senior Notes 592.7 615.0 — 615.0 — December 31, 2024 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Restricted cash $ 77.2 $ 77.2 $ 77.2 $ — $ — Financial liabilities: Term Loan B-1 286.8 288.8 — 288.8 — Term Loan A 1,166.7 1,172.4 — 1,172.4 — Revolver 377.5 377.5 — 377.5 — 2027 Senior Notes 597.6 593.2 — 593.2 — 2028 Senior Notes 699.0 675.2 — 675.2 — 2030 Senior Notes 1,187.9 1,172.6 — 1,172.6 — 2031 Senior Notes 591.7 605.2 — 605.2 — 14. CONTINGENCIES We are involved in litigation arising in the ordinary course of conducting business. We carry insurance for workers' compensation claims from our employees and general liability for claims from independent contractors, customers, and guests. We are self-insured up to an aggregate stop loss for our general liability and workers' compensation coverages. We review all litigation on an ongoing basis when making accrual and disclosure decisions. For certain legal proceedings, we cannot reasonably estimate losses or a range of loss, if any, particularly for proceedings that are in the early stages of development or where the plaintiffs seek indeterminate damages. Various factors, including but not limited to, the outcome of potentially lengthy discovery and the resolution of important factual questions, may need to be determined before probability can be established or before a loss or range of loss can be reasonably estimated. In accordance with current accounting standards for loss contingencies and based upon information currently known to us, we establish reserves for litigation when it is probable that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can be reasonably estimated. When no amount within the range of loss is a better estimate than any other amount, we accrue the minimum amount of the estimable loss. To the extent that such litigation against us may have an exposure to a loss in excess of the amount we have accrued, we believe that such excess would not be material to our consolidated financial condition, results of operations, or cash flows. Legal fees are expensed as incurred. If the loss contingency in question is not both probable and reasonably estimable, we do not establish an accrual and the matter will continue to be monitored for any developments that would make the loss contingency both probable and reasonably estimable. In the event that a legal proceeding results in a substantial judgment against us, or settlement by us, there can be no assurance that any resulting liability or financial commitment would not have a material adverse impact on our business. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 22 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 15. NET INCOME PER COMMON SHARE COMPUTATIONS The following is a reconciliation of the numerator and denominator of the net income per common share computations: Three Months Ended September 30, Nine Months Ended September 30, (in millions, except per share data) 2025 2024 2025 2024 Numerator for basic and diluted net income per common share: Net income attributable to Churchill Downs Incorporated $ 38.1 $ 65.4 $ 331.7 $ 355.1 Adjustments related to redeemable noncontrolling interests ( 0.2 ) ( 1.0 ) ( 1.8 ) ( 1.8 ) Net income attributable to common shareholders $ 37.9 $ 64.4 $ 329.9 $ 353.3 Denominator for net income per common share: Basic 70.3 73.9 71.9 74.0 Plus dilutive effect of stock awards 0.7 0.7 0.6 0.6 Diluted 71.0 74.6 72.5 74.6 Net income per common share data: Basic net income $ 0.54 $ 0.87 $ 4.59 $ 4.78 Diluted net income $ 0.54 $ 0.86 $ 4.55 $ 4.73 16. SEGMENT INFORMATION We manage our operations through three reportable segments: Live and Historical Racing, Wagering Services and Solutions, and Gaming. Our operating segments reflect the internal management reporting used by our chief operating decision maker, our Chief Executive Officer, to evaluate results of operations and to assess performance and allocate resources. Eliminations include the elimination of intersegment transactions. We utilize non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy, and allocate resources. Adjusted EBITDA includes the following adjustments: Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to noncontrolling interests. Adjusted EBITDA excludes, as applicable: • Transaction expense, net which includes: – Acquisition, disposition, and property sale related charges; – Other transaction expense, including legal, accounting, and other deal-related expense; • Stock-based compensation expense; • Rivers Des Plaines' impact on our investments in unconsolidated affiliates from legal reserves and transaction costs; • Asset impairments, net; • Gain on property sales; • Legal reserves; • Pre-opening expense; and • Other charges, recoveries and expenses FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 23 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the accompanying Condensed Consolidated Statements of Comprehensive Income. The tables below present net revenue from external customers, Adjusted EBITDA by segment and reconciles comprehensive income to Adjusted EBITDA: Net revenue by segment is comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 2025 2024 Live and Historical Racing $ 300.0 $ 247.5 $ 1,082.4 $ 957.3 Wagering Services and Solutions 118.0 111.3 383.3 369.6 Gaming 265.0 269.7 794.2 783.1 All Other — — 0.1 0.1 Net Revenue $ 683.0 $ 628.5 $ 2,260.0 $ 2,110.1 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 24 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Adjusted EBITDA by segment is comprised of the following: Three Months Ended September 30, 2025 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Revenues $ 305.7 $ 127.2 $ 265.5 Pari-mutuel taxes and purses ( 79.8 ) ( 6.0 ) ( 6.4 ) Gaming taxes ( 1.8 ) ( 0.6 ) ( 81.7 ) Marketing and advertising ( 13.5 ) ( 1.4 ) ( 9.2 ) Salaries and benefits ( 36.8 ) ( 8.7 ) ( 41.1 ) Content expense ( 1.7 ) ( 48.5 ) ( 2.3 ) Selling, general and administrative expense ( 10.7 ) ( 3.3 ) ( 10.5 ) Maintenance, insurance and utilities ( 11.9 ) ( 1.0 ) ( 10.3 ) Gaming equipment rental and technology costs ( 13.4 ) ( 0.7 ) ( 4.4 ) Food and beverage costs ( 3.6 ) — ( 4.0 ) Other operating expense ( 19.8 ) ( 11.0 ) ( 16.8 ) Equity in income of unconsolidated affiliates — — 44.5 Other income 3.7 — — Adjusted EBITDA $ 116.4 $ 46.0 $ 123.3 Three Months Ended September 30, 2024 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Revenues $ 252.4 $ 118.7 $ 270.3 Pari-mutuel taxes and purses ( 65.3 ) ( 4.9 ) ( 9.0 ) Gaming taxes ( 1.4 ) ( 0.6 ) ( 78.8 ) Marketing and advertising ( 9.3 ) ( 1.4 ) ( 9.5 ) Salaries and benefits ( 31.1 ) ( 8.0 ) ( 42.7 ) Content expense ( 1.7 ) ( 45.9 ) ( 2.3 ) Selling, general and administrative expense ( 9.4 ) ( 4.2 ) ( 11.9 ) Maintenance, insurance and utilities ( 12.8 ) ( 1.1 ) ( 11.7 ) Gaming equipment rental and technology costs ( 9.9 ) ( 0.9 ) ( 3.9 ) Food and beverage costs ( 2.4 ) — ( 4.3 ) Other operating expense ( 16.2 ) ( 9.2 ) ( 16.9 ) Equity in income of unconsolidated affiliates — — 44.0 Other income 0.1 — — Adjusted EBITDA $ 93.0 $ 42.5 $ 123.3 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 25 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Nine Months Ended September 30, 2025 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Revenues $ 1,123.0 $ 411.4 $ 799.0 Pari-mutuel taxes and purses ( 267.5 ) ( 18.1 ) ( 28.5 ) Gaming taxes ( 4.7 ) ( 1.5 ) ( 234.1 ) Marketing and advertising ( 43.0 ) ( 8.0 ) ( 26.2 ) Salaries and benefits ( 106.5 ) ( 25.8 ) ( 128.1 ) Content expense ( 5.0 ) ( 169.1 ) ( 6.7 ) Selling, general and administrative expense ( 32.0 ) ( 13.2 ) ( 32.2 ) Maintenance, insurance and utilities ( 33.5 ) ( 3.0 ) ( 29.5 ) Gaming equipment rental and technology costs ( 37.8 ) ( 2.2 ) ( 13.0 ) Food and beverage costs ( 11.1 ) — ( 12.3 ) Other operating expense ( 70.8 ) ( 35.2 ) ( 49.3 ) Equity in income of unconsolidated affiliates — — 134.4 Other income 3.8 — 0.6 Adjusted EBITDA $ 514.9 $ 135.3 $ 374.1 Nine Months Ended September 30, 2024 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Revenues $ 991.5 $ 392.7 $ 787.9 Pari-mutuel taxes and purses ( 227.3 ) ( 15.8 ) ( 32.7 ) Gaming taxes ( 4.4 ) ( 1.9 ) ( 219.1 ) Marketing and advertising ( 31.1 ) ( 7.5 ) ( 26.5 ) Salaries and benefits ( 94.4 ) ( 23.9 ) ( 121.0 ) Content expense ( 5.1 ) ( 163.2 ) ( 6.7 ) Selling, general and administrative expense ( 26.7 ) ( 13.0 ) ( 33.9 ) Maintenance, insurance and utilities ( 34.6 ) ( 3.1 ) ( 32.4 ) Gaming equipment rental and technology costs ( 30.5 ) ( 2.6 ) ( 11.4 ) Food and beverage costs ( 8.8 ) — ( 12.4 ) Other operating expense ( 55.9 ) ( 33.4 ) ( 46.7 ) Equity in income of unconsolidated affiliates — — 139.9 Other income 0.3 — 1.8 Adjusted EBITDA $ 473.0 $ 128.3 $ 386.8 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 26 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Adjusted EBITDA by segment is comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2025 2024 2025 2024 Reconciliation of Comprehensive Income to Adjusted EBITDA: Net income and comprehensive income attributable to Churchill Downs Incorporated $ 38.1 $ 65.4 $ 331.7 $ 355.1 Net income attributable to noncontrolling interests 1.1 0.8 2.3 1.7 Net income 39.2 66.2 334.0 356.8 Adjustments Depreciation and amortization 56.5 49.6 173.5 145.7 Interest expense 75.6 73.1 222.1 217.0 Income tax provision 22.0 19.9 115.1 125.4 Stock-based compensation expense 7.4 7.1 18.2 23.2 Pre-opening expense 2.4 7.8 9.0 23.6 Other expenses, net 2.9 1.0 7.7 1.3 Asset impairments, net 45.1 3.9 47.5 3.9 Transaction expense, net 1.9 ( 4.0 ) 3.4 0.7 Other income, expense: Interest, depreciation and amortization expense related to equity investments 9.4 10.6 28.9 31.4 Rivers Des Plaines' legal reserves and transaction costs — — — 0.3 Other charges and recoveries, net ( 0.1 ) 0.1 ( 1.1 ) ( 6.7 ) Total adjustments 223.1 169.1 624.3 565.8 Adjusted EBITDA $ 262.3 $ 235.3 $ 958.3 $ 922.6 Adjusted EBITDA by segment: Live and Historical Racing $ 116.4 $ 93.0 $ 514.9 $ 473.0 Wagering Services and Solutions 46.0 42.5 135.3 128.3 Gaming 123.3 123.3 374.1 386.8 Total segment Adjusted EBITDA 285.7 258.8 1,024.3 988.1 All Other ( 23.4 ) ( 23.5 ) ( 66.0 ) ( 65.5 ) Total Adjusted EBITDA $ 262.3 $ 235.3 $ 958.3 $ 922.6 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 27 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) The table below presents total asset information for each of our segments: (in millions) September 30, 2025 December 31, 2024 Total assets: Live and Historical Racing $ 4,351.1 $ 4,143.3 Wagering Services and Solutions 468.9 460.6 Gaming 1,544.4 1,953.7 Total segment assets 6,364.4 6,557.6 All Other 1,090.4 718.3 Total assets $ 7,454.8 $ 7,275.9 The table below presents total capital expenditures for each of our segments: Nine Months Ended September 30, (in millions) 2025 2024 Capital expenditures: Live and Historical Racing $ 177.4 $ 287.7 Wagering Services and Solutions 18.0 14.2 Gaming 24.3 105.4 Total segment capital expenditures 219.7 407.3 All Other 4.9 10.3 Total capital expenditures $ 224.6 $ 417.6 17. SUBSEQUENT EVENTS At its regularly scheduled meeting held on October 21, 2025, the Board of Directors of the Company declared an annual cash dividend on the Company's common stock of $ 0.438 per outstanding share, to be paid on January 6, 2026, to shareholders of record as of the close of business on December 5, 2025, with the aggregate cash dividend to be paid to each shareholder rounded to the nearest whole cent. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2025 28