What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-25 compared with 2025-02-20 · 223 added, 232 removed, 1225 unchanged (27% of the section changed)

15 unchanged sentences

Selling, general and administrative expense 246.2 237.7 202.3

Asset impairments 3.9 24.6 38.3

Transaction (benefit) expense ( 12.1 ) 4.8 42.1

Asset impairments, net 47.5 3.9 24.6

Transaction expense (benefit) 5.1 ( 12.1 ) 4.8

Total operating expense 2,242.1 2,025.3 1,897.7

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Net income 385.5 429.1 417.3

Net income attributable to noncontrolling interest 2.3 — —

Net income attributable to noncontrolling interests 2.5 2.3 —

Net income and comprehensive income attributable to Churchill Downs Incorporated $ 383.0 $ 426.8 $ 417.3

Net income attributable to Churchill Downs Incorporate per common share data:

Net income attributable to Churchill Downs Incorporated per common share data:

Basic net income $ 5.32 $ 5.73 $ 5.55

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( 28.5 ) ( 28.5 )

Other ( 0.9 ) ( 0.9 )

Balance, December 31, 2023 74.5 — 894.5 ( 0.9 ) 893.6

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Repurchase of common stock ( 1.5 ) ( 35.8 ) ( 153.2 ) ( 189.0 )

Reclassification to liability rewards ( 20.9 ) ( 20.9 )

Taxes paid related to net share settlement of stock awards ( 0.2 ) ( 27.3 ) ( 27.3 )

7 unchanged sentences

Repurchase of common stock ( 4.2 ) ( 24.2 ) ( 401.1 ) ( 425.3 )

Reclassification to liability awards ( 20.9 ) ( 20.9 )

Taxes paid related to net share settlement of stock awards ( 0.1 ) ( 17.2 ) ( 17.2 )

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Asset impairments 87.5 3.9 24.6

Gain on settlement of liability ( 40.0 ) — —

Amortization of operating lease assets 6.4 5.6 6.2

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Interest $ 294.5 $ 306.8 $ 283.6

Cash paid for income taxes 108.2 99.1 68.6

Cash received from income tax refunds 5.2 0.9 61.6

Taxes paid (net of refunds) by jurisdiction

Federal $ 46.7 $ 83.3 $ 67.4

Illinois 3.3 4.3 6.5

Virginia 3.3 2.8 3.4

Kentucky 2.4 3.6 5.7

Other 7.9 9.0 15.2

$ 63.6 $ 103.0 $ 98.2

Schedule of non-cash investing and financing activities:

Dividends payable $ 30.7 $ 31.0 $ 29.3

Deferred payment on gaming rights incurred during the period — — 50.6

Deferred payments on the acquisition of business included in other liabilities — 1.2 4.9

Property and equipment additions included in accounts payable and accrued expense and other current liabilities 30.1 43.7 95.1

Fair value of noncontrolling interest recognized in connection with asset acquisition 20.4 — —

The accompanying notes are an integral part of the consolidated financial statements.

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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.

We own and operate 15 live and historical racing entertainment venues in three states, one of the largest online horse racing wagering platforms in the U.S., ten wholly owned casino gaming properties in nine states and 14 retail sportsbooks.

We own and operate 17 live and historical racing entertainment venues with seven retail sportsbooks in three states, one of the largest online horse racing wagering platforms in the U.S., ten wholly owned casino gaming properties with nine retail sportsbooks in nine states.

We were organized as a Kentucky corporation in 1928, and our principal executive offices are located in Louisville, Kentucky.

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Adverse industry or economic trends, lower projections of profitability, or a sustained decline in our market capitalization, among other items, may be indications of potential impairment issues, which are triggering events requiring the testing of an asset’s carrying value for recoverability.

Goodwill is allocated and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component.

We are required to aggregate the components of an operating segment into one reporting unit if they have similar economic characteristics.

Goodwill is allocated and evaluated for impairment at the reporting unit level, which is

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

defined as an operating segment or one level below an operating segment, referred to as a component.

We are required to aggregate the components of an operating segment into one reporting unit if they have similar economic characteristics.

Our gaming rights and trademarks are considered indefinite-lived intangible assets that do not require amortization based on our future expectations to operate our gaming facilities and use the trademarks indefinitely and our historical experience in renewing these intangible assets at minimal cost with various state gaming commissions.

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The transaction price for export revenue is variable based on the simulcast host fee we charge our customers for exporting our signal.

We may provide cash incentives in conjunction with wagering transactions we accept from TwinSpires' customers.

We may provide cash incentives in conjunction with wagering transactions we accept from TwinSpires'

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

These cash incentives represent consideration payable to a customer and therefore are treated as a reduction of the transaction price for the wagering transaction.

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These arrangements are licenses of intellectual property containing a usage-based royalty.

As a result, we have elected to use

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

the practical expedient to omit disclosure related to remaining performance obligations for our export revenue contracts.

As a result, we have elected to use the practical expedient to omit disclosure related to remaining performance obligations for our export revenue contracts.

We recognize on-track revenue, export revenue, and import revenue once the live race event is made official by the relevant racing regulatory body.

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The majority of our HRM facilities and gaming properties offer loyalty programs that enable customers to earn loyalty points based on their play.

HRM and gaming transactions involve two performance obligations for those customers earning loyalty points under the Company’s loyalty programs and a single performance obligation for customers who do not participate in the program.

Loyalty points are primarily redeemable for free wagering activities and food and beverage.

For purposes of allocating the transaction price in an HRM and gaming transaction between the wagering performance obligation and the

HRM and gaming transactions involve two performance obligations for those customers earning loyalty

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

obligation associated with the loyalty points earned, the Company allocates an amount to the loyalty point contract liability based on the stand-alone selling price of the points earned, which is determined by the value of a loyalty point that can be redeemed for wagering activities or food and beverage.

points under the Company’s loyalty programs and a single performance obligation for customers who do not participate in the program.

Loyalty points are primarily redeemable for free wagering activities and food and beverage.

For purposes of allocating the transaction price in an HRM and gaming transaction between the wagering performance obligation and the obligation associated with the loyalty points earned, the Company allocates an amount to the loyalty point contract liability based on the stand-alone selling price of the points earned, which is determined by the value of a loyalty point that can be redeemed for wagering activities or food and beverage.

For gaming transactions, an amount of the transaction price allocated to the gaming performance obligation using the residual approach as the stand-alone price for wagers is highly variable and no set established price exists for such wagers.

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The Company’s insurance captive, which was established in April 2024, maintains cash reserves to cover insurable claims.

Insurance captive cash reserves totaled $ 8.3 million as of December 31, 2024.

Insurance captive cash reserves totaled $ 15.1 million and $ 8.3 million as of December 31, 2025 and December 31, 2024, respectively.

Allowance for Credit Losses

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Internal use software costs for our Wagering Services and Solutions' segment software are capitalized in property and equipment, net in the accompanying Consolidated Balance Sheets, in accordance with accounting guidance governing computer software developed or obtained for internal use.

Once the software is placed in operation, we amortize the capitalized software over the software's estimated economic useful life, which is generally three years .

We capitalized internal use software of approximately $ 18.4 million in 2024, $ 13.2 million in 2023, and $ 11.2 million in 2022.

We incurred amortization expense of approximately $ 13.0 million in 2024, $ 11.2 million in 2023, and $ 10.7 million in 2022, for projects which had been placed in service.

Once the software is placed in operation, we amortize the capitalized software

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

over the software's estimated economic useful life, which is generally three years .

We capitalized internal use software of approximately $ 19.3 million in 2025, $ 18.4 million in 2024, and $ 13.2 million in 2023.

We incurred amortization expense of approximately $ 12.8 million in 2025, $ 13.0 million in 2024, and $ 11.2 million in 2023, for projects which had been placed in service.

Fair Value of Assets and Liabilities

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Costs incurred to complete the business combination are not considered part of consideration and are expensed as incurred.

Refer to Note 3, Acquisitions and Dispositions, for further information.

Refer to Note 3, Acquisitions, for further information.

We determine if an arrangement is a lease at inception and categorize as either operating or finance based on the criteria of ASC 842.

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Debt issuance costs and loan origination fees associated with our term debt, Revolver (as defined in Note 11, Debt), and notes payable are amortized as interest expense over the term of each respective financial instrument.

Debt issuance costs and loan origination fees associated with our term debt and notes payable are presented as a direct deduction from the carrying amount of the related liability.

Debt issuance costs and loan origination fees associated with our revolver are presented as an asset.

Debt issuance costs and loan

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

origination fees associated with our term debt and notes payable are presented as a direct deduction from the carrying amount of the related liability.

Debt issuance costs and loan origination fees associated with our revolver are presented as an asset.

Casino and Pari-mutuel Taxes

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Our common stock has no par or stated value.

We record the full value of share repurchases, upon the trade date, against common stock on our Consolidated Balance Sheets except when to do so would result in a negative balance in such common stock account.

In such instances, we record the cost of any further share repurchases as a reduction to retained earnings.

Due to the large number of shares of our common stock repurchased over the

We record the full value of share repurchases, upon the trade date, against common stock on our Consolidated Balance Sheets except when to do so would

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

past several years, our common stock balance will frequently be zero at the end of any given reporting period.

result in a negative balance in such common stock account.

In such instances, we record the cost of any further share repurchases as a reduction to retained earnings.

Due to the large number of shares of our common stock repurchased over the past several years, our common stock balance will frequently be zero at the end of any given reporting period.

Refer to Note 9, Shareholders' Equity, for additional information on our share repurchases.

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Recent Accounting Pronouncements - Adopted in 2025

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which enhances the disclosures required for operating segments in the Company’s annual and interim consolidated financial statements.

The amendments were effective for the Company in fiscal years beginning after December 15, 2023, and will be effective for the interim periods within fiscal years beginning after December 15, 2024.

The adoption of this ASU did not have a material impact on our business.

Refer to Note 21, Segment Information for applicable reportable segment disclosures required by this guidance.

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

The amendments were effective for the Company for fiscal years beginning after December 15, 2024, and will be effective for the interim periods within fiscal years beginning after December 15, 2025.

The adoption of this ASU, including retrospective application, did not have a material impact on our business.

Refer to Note 8, Income Taxes and the Consolidated Statements of Cash Flows for the applicable disclosures required by this guidance.

Recent Accounting Pronouncements - Effective in 2026 or thereafter

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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 amendments are expected to be applied prospectively to all annual periods beginning after December 15, 2024.

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):

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The Company is currently assessing the impact of this standard on the consolidated financial statements and related disclosures.

ACQUISITIONS & DISPOSITIONS

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses:

Measurement of Credit Losses for Accounts Receivable and Contract Assets (Topic 326).

The update permits entities to elect a practical expedient for estimating expected credit losses on current trade receivables and current contract assets by assuming that conditions existing at the balance sheet date will remain unchanged over the life of those assets.

The updated standard is effective for fiscal years beginning after December 15, 2025, and interim periods beginning after December 15, 2026, with early adoption permitted.

The Company is currently assessing the impact of this standard on the consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting for internal-use software.

The update removes all references to software development stages and requires capitalization of software costs when management has committed to the software project and it is probable the software will be completed and perform its intended use.

This standard is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.

The Company is currently assessing the impact of this standard on the consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements, which clarifies certain interim reporting guidance.

The update is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years.

The Company is currently assessing the impact of this standard on the consolidated financial statements and related disclosures.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

On August 27, 2025, the Company completed its acquisition of 90 % of the outstanding equity interests of Casino Salem (the "Salem Transaction") for a base purchase price of $ 180.0 million, and the transaction 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 cash flows 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.

Exacta Systems

On August 22, 2023, the Company completed its acquisition of Exacta for purchase consideration of $ 248.2 million, net of cash acquired, consisting of a $ 241.3 million cash payment and $ 6.9 million of deferred payments, which is payable over two years (the "Exacta Transaction").

As of December 31, 2024, there were $ 1.2 million deferred payments remaining.

On August 22, 2023, the Company completed its acquisition of Exacta (the "Exacta Transaction") for purchase consideration of $ 248.2 million, net of cash acquired, consisting of a $ 241.3 million cash payment and $ 6.9 million of deferred payments, which were paid over two years .

As of December 31, 2025, there were no deferred payments remaining.

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

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The following table summarizes the fair value of the assets acquired and liabilities assumed, net of cash acquired of $ 1.8 million, as of August 22, 2023:

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

(in millions) Total

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Net assets acquired (net of cash) $ 248.2

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

The fair value of the intangible assets consists of the following:

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The goodwill related to the Exacta Transaction is deductible for tax purposes.

P2E Transaction

On November 1, 2022, the Company completed the acquisition of substantially all the ass ets of Peninsula Pacific Entertainment LLC (the "P2E Transaction") for a purchase consideration of $ 2,835.9 million, net of cash acquired.

The Peninsula Pacific Entertainment LLC ("P2E") assets acquired included Colonial Downs and six HRM entertainment venues in Virginia, del Lago in New York, and Hard Rock Sioux City in Iowa, as well as the development rights for Dumfries and Emporia HRM facilities in Virginia, and up to five additional HRM entertainment venues in Virginia.

The following table summarizes the fair value of the assets acquired and liabilities assumed, net of cash acquired of $ 126.4 million, as of November 1, 2022:

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

(in millions) Total

Accounts receivable $ 9.8

Other current assets 7.2

Property and equipment 611.2

Goodwill 347.8

Other intangible assets 1,941.5

Deferred taxes 20.8

Other assets 16.0

Total assets acquired $ 2,954.3

Accounts payable 4.0

Accrued expenses and other current liabilities 96.9

Other liabilities assumed 17.5

Total liabilities assumed $ 118.4

Net assets acquired (net of cash) $ 2,835.9

The fair value of the intangible assets consists of the following:

(in millions) Fair Value Recognized

Gaming rights $ 1,865.6

Trademark 75.9

Total intangible assets $ 1,941.5

The gaming rights intangible assets were assigned an indefinite useful life based on the Company's expected use of the assets and determination that no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of the gaming rights.

The trademarks were assigned an indefinite useful life based on the Company’s intention to keep the trademarks for an indefinite period of time.

Goodwill of $ 347.8 million was recognized due to the expected contribution of P2E to the Company's overall business strategy.

The goodwill was assigned to the Gaming segment in the amount of $ 129.1 million and to the Live and Historical Racing segment in the amount of $ 218.7 million and is mostly deductible for tax purposes.

For the period November 1, 2022 through December 31, 2022, the operations of the properties acquired as part of the P2E Transaction, including the associated retail sportsbooks, generated net revenue of $ 109.7 million and net income of $ 42.9 million.

The following unaudited pro forma consolidated financial information for the Company has been prepared assuming the P2E Transaction had occurred as of January 1, 2021.

The unaudited pro forma financial information is not necessarily indicative of either future results of operations or results of operations that might have been achieved had the acquisition been consummated as of January 1, 2021.

(in millions) Year Ended December 31, 2022

Net revenue $ 2,348.7

Net income $ 535.4

On September 26, 2022, the Company completed the Ellis Park Transaction for total consideration of $ 79.0 million in cash, plus $ 3.5 million in working capital and other purchase price adjustments.

The fair values of the assets acquired and liabilities assumed, net of cash acquired of $ 1.4 million, are as follows:

property and equipment of $ 19.3 million, indefinite-lived gaming rights of $ 47.4 million, indefinite-lived trademark of $ 3.6 million, goodwill of $ 9.2 million, and net working capital of $ 1.6 million.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Chasers Poker Room

On September 2, 2022, the Company completed the Chasers Transaction which was treated as an asset acquisition because substantially all the value of the gross assets acquired was concentrated in the gaming rights.

The Company made an initial payment at closing and recorded a liability for the remaining payments due on a future date.

In conjunction with the acquisition, the Company recorded an $ 82.2 million gaming rights intangible asset which represented its fair value at the date of acquisition.

Valuation Techniques

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The fair value of the land was determined using the market approach and the fair values of the remaining property and equipment were primarily determined using the cost replacement method which is based on replacement or reproduction costs of the assets.

The fair value of gaming rights was determined using the Greenfield Method, which is an income approach methodology that calculates the present value of the overall business enterprise 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.

Trademark intangible assets were valued using the relief-from-royalty method of the income approach, which estimates the fair value of the intangible assets by discounting the fair value of the hypothetical royalty payments a market participant would be willing to pay to enjoy the benefits of the assets.

The estimated future revenue, royalty rates, and discount rates were the primary assumptions and estimates in the valuation of the trademarks.

The Company has not included other disclosures regarding the Exacta, Chasers, or Ellis Park Transactions as these transactions are immaterial to our business.

The Company has not included other disclosures regarding the Salem and Exacta Transactions as these transactions are immaterial to our business.

Lady Luck Casino Nemacolin

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We received net proceeds of $ 195.7 million for the 326 -acres and recognized a gain of $ 114.0 million on the sale, which is included in other (expense) income in the accompanying Consolidated Statements of Comprehensive Income.

The Company executed a forward like-kind exchange transaction by purchasing certain property as part of the P2E Transaction for $ 197.2 million, which qualified as an Internal Revenue Code §1031 transaction.

An exchange accommodation titleholder ("EAT"), a type of variable interest entity, was used to facilitate this reverse like-kind exchange.

The Company determined that it is the primary beneficiary of the EAT, thus the property held by the EAT has been consolidated and recorded in property and equipment, net on the Consolidated Balance Sheets.

Calder Land Sale

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

The Company received cash proceeds of $ 279.0 million which was net of $ 12.0 million of transaction costs.

We recognized a gain of $ 274.6 million on the sale of the land, which is included in other (expense) income in the accompanying Consolidated Statements of Comprehensive Income.

The gain consisted of cash proceeds of $ 279.0 million offset by the carrying value of the assets sold of $ 4.4 million.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

The proceeds were held by a qualifying intermediary in an interest-bearing account until they were utilized to purchase property as part of the P2E Transaction and to invest in other replacement properties that qualify as Internal Revenue Code §1031 transactions to defer the federal income tax on the gain on the Calder land sale.

The Company completed one reverse like-kind exchange in June 2022 involving our $ 9.9 million investment in real property for the Derby City Gaming Downtown facility in Louisville, Kentucky, and one reverse like-kind exchange in December 2022 involving our $ 24.9 million investment in real property for the Terre Haute Casino Resort in Vigo County, Indiana.

The remaining proceeds were used to execute a forward like-kind exchange with the P2E Transaction to purchase real property associated with del Lago in November 2022.

PROPERTY AND EQUIPMENT

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Balance, December 31, 2023 $ 376.2 $ 233.4 $ 290.3 $ — $ 899.9

Additions 95.9 81.2 — — 177.1

Adjustments 0.1 0.2 — — 0.3

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Indefinite-lived intangible assets consist primarily of trademarks and state gaming rights in Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Mississippi, New Hampshire, New York, and Virginia.

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.

The estimated future revenue, royalty rates, and discount rates were the primary assumptions and estimates in the valuation of the trademarks.

Amortization expense for definite-lived intangible assets was $ 10.3 million in 2025, $ 11.1 million in 2024, and $ 7.2 million in 2023, and is classified in operating expense in the accompanying Consolidated Statements of Comprehensive Income.

Refer to Note 7, Asset Impairments, for information regarding intangible asset impairments recognized during 2023.

Refer to Note 7, Asset Impairments, for information regarding intangible asset impairments recognized during 2025 and 2023.

We performed our annual indefinite-lived intangible assets impairment analysis as of April 1, 2025, which included an assessment of qualitative and quantitative factors to determine whether it is more likely than not that the fair values of the indefinite-lived intangible assets are less than the carrying amount.

We concluded that the fair values of our indefinite-lived intangible assets exceeded their carrying value.

Future estimated aggregate amortization expense on existing definite-lived intangible assets for each of the next five fiscal years is as follows (in millions):

Years Ended December 31, Estimated Amortization Expense

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Future estimated aggregate amortization expense on existing definite-lived intangible assets for each of the next five fiscal years is as follows (in millions):

Years Ended December 31, Estimated Amortization Expense

ASSET IMPAIRMENTS

Chasers Poker Room Impairment

During the third quarter of 2025, the Company concluded that the completion of the Salem Transaction qualified as a trigger event for impairment testing related to the Chasers Poker Room ("Chasers").

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 open Rockingham Grand Casino and does not plan to expand Chasers.

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.

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 Consolidated Statements of Comprehensive Income.

Presque Isle Impairments

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As a result, the Company concluded that a trigger event for impairment testing occurred related to the Presque Isle gaming rights, trademark, and the reporting unit's goodwill at the end of the second quarter ("2023 Trigger Event").

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Based on the 2023 Trigger Event, the Company evaluated and subsequently updated the projected cash flows and discount rate to reflect the economic environment at that time.

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Other Impairments

On February 24, 2022, the Company announced plans to exit the direct online Sports and Casino business.

During the quarter ended March 31, 2022, the Company evaluated whether this planned exit would indicate it is more likely than not that any of the Company’s intangible assets, long-lived assets, current assets, or property and equipment were impaired.

Based on the evaluation, the Company concluded that a trigger event for impairment testing occurred related to certain Wagering Services and Solutions assets.

As a result, the Company recorded a $ 4.9 million non-cash impairment charge related to certain assets in the Wagering Services and Solutions segment.

In the third quarter of 2024, we recorded a $ 3.9 million write-off of HRMs in Virginia that are no longer in use.

We recorded a $ 2.4 million and $ 3.9 million write-off of HRMs in Virginia that are no longer in use in the second quarter of 2025 and the third quarter of 2024, respectively.

Churchill Downs Incorporated

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Income tax provision $ 146.9 $ 144.1 $ 144.5

Income from operations before provision for income taxes were as follows:

Years Ended December 31,

(in millions) 2024 2023 2022

Domestic $ 573.2 $ 561.8 $ 608.9

Foreign — — ( 0.1 )

Income from operations before provision for income taxes $ 573.2 $ 561.8 $ 608.8

Income from operations before provision for income taxes for the year ended December 31, 2025, 2024 and 2023 was $ 532.4 million, $ 573.2 million and $ 561.8 million, respectively, and were all domestic in each period.

Our income tax provision is different from the amount computed by applying the federal statutory income tax rate to income from operations before taxes as follows:

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(in millions) 2025 2024 2023

Income from operations before provision for income taxes $ 532.4 $ 573.2 $ 561.8

Federal statutory tax on earnings before income taxes $ 111.8 21.0 % $ 120.3 21.0 % $ 117.9 21.0 %

State income taxes, net of federal income tax benefit 31.7 6.0 % 19.7 3.4 % 23.5 4.2 %

Effect of cross border tax laws — — ( 0.4 ) ( 0.1 ) % ( 0.4 ) ( 0.1 ) %

Tax credits ( 1.1 ) ( 0.2 ) % ( 0.9 ) ( 0.1 ) % ( 0.8 ) ( 0.1 ) %

Nontaxable or nondeductible items - U.S.

Non-deductible officer's compensation 6.5 1.2 % 7.0 1.2 % 5.0 0.9 %

Other ( 1.4 ) ( 0.3 ) % ( 0.1 ) — 0.7 0.1 %

Changes in unrecognized tax benefits - fed, state & foreign ( 0.6 ) ( 0.1 ) % ( 1.5 ) ( 0.3 ) % ( 1.4 ) ( 0.3 ) %

Income tax provision $ 146.9 27.6 % $ 144.1 25.1 % $ 144.5 25.7 %

During 2025, greater than 50% of the Company’s effective tax rate related to the state income tax category was generated from tax expense in Kentucky, New Hampshire, Virginia, and Illinois.

During 2024, greater than 50% of the Company’s effective tax rate related to the state income tax category was generated from tax expense in Kentucky and Virginia, and in 2023 from tax expense in Illinois, Virginia and Kentucky.

Churchill Downs Incorporated

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Net deferred tax liability $ ( 519.5 ) $ ( 432.7 )

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 are expected to 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.

The expected reduction in cash paid taxes as a result of these new tax provisions will increase cash flow from operating activities.

During 2025, the Company began utilizing the deferred tax asset related to its § 163(j) interest expense limitation carryforward for federal and certain states.

We have recorded a valuation allowance of $ 14.0 million against net deferred tax assets primarily related to the interest carryforward that we do not expect to utilize for state purposes.

As of December 31, 2025, we had U.S.

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We also had U.S.

state tax credits with a tax value of $ 2.2 million that do not expire which we expect to fully utilize.

The Internal Revenue Service's most recent audit was completed for tax year 2012.

Tax years 2021 and after are open to examination.

As of December 31, 2024, we had approximately $ 3.2 million of total gross unrecognized tax benefits, excluding interest of $ 0.4 million.

If the total gross unrecognized tax benefits were recognized, there would be a $ 3.0 million effect to the annual effective tax rate.

We anticipate a decrease in our unrecognized tax positions of approximately $ 0.2 million during the next twelve months primarily due to expected settlements with tax authorities and the expiration of statutes of limitation.

state tax credits and deductions with a tax value of $ 2.0 million that do not expire which we expect to fully utilize.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

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Balance as of December 31 $ 2.4 $ 3.2 $ 4.8

The Internal Revenue Service's most recent audit was completed for tax year 2012.

Tax years 2022 and after are open to examination.

As of December 31, 2025, we had approximately $ 2.4 million of total gross unrecognized tax benefits, excluding interest of $ 0.4 million.

If the total gross unrecognized tax benefits were recognized, there would be a $ 2.2 million effect to the annual effective tax rate.

We anticipate a decrease in our unrecognized tax positions of approximately $ 0.4 million during the next twelve months primarily due to expected settlements with tax authorities and the expiration of statutes of limitation.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

SHAREHOLDERS' EQUITY

Stock Repurchase Programs

On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $ 500.0 million ("2021 Stock Repurchase Program").

Repurchases may be made at management’s discretion from time to time on the open market (either with or without a 10b5-1 plan) or through privately negotiated transactions.

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 $ 149.6 million of repurchase authority remaining under this program on December 31, 2024.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

We repurchased the following shares under the 2021 Stock Repurchase Programs:

For the year ending December 31,

We had approximately $ 429.5 million of repurchase authority remaining under the July 2025 Stock Repurchase Program at December 31, 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.

On September 29, 2021, the Board of Directors of the Company approved a common stock repurchase program of up to $ 500.0 million ("2021 Stock Repurchase Program").

As described above, the 2021 Stock Repurchase Program was replaced by the March 2025 Stock Repurchase Program.

We repurchased the following shares under our Stock Repurchase Programs:

For the year ended December 31,

(in millions, except share data) 2025 2024 2023

Repurchase Program Shares Aggregate Purchase Price Shares Aggregate Purchase Price Shares Aggregate Purchase Price

July 2025 Stock Repurchase Program 683,921 $ 70.5 — $ — — $ —

March 2025 Stock Repurchase Program 3,294,447 330.8 — — — —

2021 Stock Repurchase Program 212,012 24.0 506,300 65.3 461,761 55.3

Total 4,190,380 $ 425.3 506,300 $ 65.3 461,761 $ 55.3

On April 25, 2023, the Company’s Board of Directors approved a two -for-one Stock Split and an amendment to the Company’s Articles of Incorporation to increase the number of shares of common stock the Company is authorized to issue from 150,000,000 shares, no par value, to 300,000,000 shares, no par value.

This amendment to the Company’s Articles of Incorporation became effective on May 19, 2023 and our common stock began trading at the split-adjusted price on May 22, 2023.

All share and per-share amounts in the Company’s consolidated financial statements and related notes have been retroactively adjusted to reflect the effects of the Stock Split.

As of December 31, 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.

The Duchossois Group ("TDG") Share Repurchase

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2025 Omnibus Stock Incentive Plan

We have a stock-based employee compensation plan with awards outstanding under the Churchill Downs Incorporated 2016 Omnibus Stock Incentive Plan (the "2016 Plan") and Executive Long-Term Incentive Compensation Plan, which was adopted pursuant to the 2016 Plan.

The 2016 Plan is intended to advance our long-term success by encouraging stock ownership among key employees and the Board of Directors.

Awards may be in the form of stock options, stock appreciation rights, restricted stock awards ("RSA"), restricted stock units ("RSU"), performance share units ("PSU"), performance units, or performance cash.

The 2016 Plan has a minimum vesting period of one year for awards granted.

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

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

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.

The Plans are intended to advance our long-term success by encouraging stock ownership among key employees and the Board of Directors.

Awards may be in the form of stock options, stock appreciation rights, restricted stock awards ("RSA"), restricted stock units ("RSU"), other share-based awards, performance share units ("PSU"), performance units, or performance cash.

Restricted Stock, Restricted Stock Units, and Performance Share Units

The 2025 Plan permits the award of RSAs, RSUs, or PSUs to directors and key employees responsible for the management, growth and protection of our business.

RSUs granted to employees under the 2016 Plan generally vest either in full upon three years from the date of grant or on a pro rata basis over a three-year term.

RSUs granted to employees are converted into shares of our common stock at vesting.

The RSAs and RSUs granted to directors under the 2016 Plan generally vest in full upon one year from the date of grant.

RSUs granted to employees under the 2025 and 2016 Plans generally vest either in full upon three years from the date of grant or on a pro rata basis over a three-year term.

RSUs granted to employees are converted into shares of our common stock at vesting or may be settled in cash upon vesting.

The RSAs and RSUs granted to directors under the 2025 and 2016 Plans generally vest in full upon one year from the date of grant.

RSAs are legally issued common stock at the time of grant, with certain restrictions placed on them.

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The fair value of RSAs and RSUs that vest solely based on continued service under the Plan is determined by the product of the number of shares granted and the grant date market price of our common stock.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

PSUs granted to key executives have performance periods ranging from two to three years and vest depending on the Company’s achievement of predetermined targets related to both performance and market criteria.

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As a result of the modification, the Company recorded stock-based compensation expense of $ 4.1 million during the year ended December 31, 2024.

At December 31, 2024, the Company had $ 25.0 million recorded as liability-classified awards, which is included in accrued expense and other liabilities in the accompanying Consolidated Balance Sheets.

At December 31, 2025 and 2024, the Company had $ 21.0 million and $ 25.0 million, respectively, recorded as liability-classified awards, which is included in accrued expense and other liabilities in the accompanying Consolidated Balance Sheets.

A summary of the 2025 RSA's, RSU's, and PSUs granted to certain executives, employees, and the Board of Directors is presented below (shares/units in thousands):

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(1) PSUs presented are based on the target number of units for the original PSU grant.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Activity for our RSAs, RSUs, and PSUs is presented below (shares/units in thousands):

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(1) Adjustment to number of target units awarded for PSUs based on achievement of underlying performance goals.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

The fair value of shares and units vested was $ 48.8 million in 2025, $ 69.7 million in 2024, and $ 55.0 million in 2023.

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Compensation expense related to the ESP Plan was not material for any year included in our accompanying Consolidated Statements of Comprehensive Income.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

The following table presents our total debt outstanding:

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The Company has $ 4.4 million of capitalized unamortized debt issuance costs associated with the Term Loan A which are being amortized as interest expense over the remainder of the term.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

On February 14, 2025, the Company announced that it closed the seventh amendment of the Credit Agreement.

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The Credit Agreement is collateralized by substantially all the wholly owned assets of the Company.

The Credit Agreement contains certain customary affirmative and negative covenants, which include limitations on liens, investments, indebtedness, dispositions, mergers and acquisitions, the making of restricted payments, changes in the nature of business, changes in fiscal year, and transactions with affiliates.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

year, and transactions with affiliates.

The Credit Agreement also contains financial covenants providing for the maintenance of a maximum consolidated secured net leverage ratio and maintenance of a minimum consolidated interest coverage ratio.

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The 2027 Senior Notes will vote as one class under the indenture governing the 2027 Senior Notes.

The Company may redeem some or all of the 2027 Senior Notes at redemption prices set forth in the 2027 Indenture.

The Company may redeem some or all the 2027 Senior Notes at redemption prices set forth in the 2027 Indenture.

2028 Senior Notes

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In connection with the offering, we capitalized $ 7.7 million of debt issuance costs which are being amortized as interest expense over the term of the Existing 2028 Notes.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

On March 17, 2021, the Company completed an offering of $ 200.0 million in aggregate principal amount of 4.75 % Senior Unsecured Notes that mature on January 15, 2028 (the "Additional 2028 Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A that is exempt from registration under the Securities Act, and to certain non-U.S.

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In connection with the offering, we capitalized $ 18.3 million of debt issuance costs which are being amortized as interest expense over the term of the 2030 Senior Notes.

The 2030 Senior Notes were issued at 100 % of the principal amount, plus interest deemed to have accrued from April 13, 2022, with interest payable in arrears on April 1st and October 1st of each year, commencing on October 1, 2022.

The 2030 Senior Notes will vote as one class under the indenture governing the 2030 Senior Notes.

The Issuer may redeem some of or all the 2030 Senior Notes at any time prior to April 1, 2025, at redemption prices set forth in the 2030 Offering Memorandum.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

The 2030 Senior Notes will vote as one class under the indenture governing the 2030 Senior Notes.

The Company may redeem some or all the 2030 Senior Notes at redemption prices set forth in the 2030 Indenture.

2031 Senior Notes

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The 2031 Senior Notes will vote as one class under the indenture governing the 2031 Senior Notes.

The Company may redeem some or all of the 2031 Senior Notes at any time prior to April 25, 2025, at redemption prices set forth in the 2031 Offering Memorandum.

The Company may redeem some or all the 2031 Senior Notes at redemption prices set forth in the 2031 Indenture.

Future aggregate maturities of total debt are as follows (in millions):

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Total $ 5,155.1

The Company is exploring options to fund upcoming senior note maturities through a combination of cash on hand, cash generated from operations, available capacity under its revolving credit facility, and capital markets to fund the obligation.

Access to capital markets and the terms under which we would fund the obligations are subject to our ability to access the market and other market conditions.

REVENUE FROM CONTRACTS WITH CUSTOMERS

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Contract liabilities primarily relate to our Live and Historical Racing segment.

The decrease in contract liabilities from December 31, 2023 to December 31, 2024 was primarily due to decreased advanced ticket sales in the deferred revenue balance at December 31, 2024.

We recognized $ 76.1 million of revenue during the year ended December 31, 2024 that was included in the contract liabilities balance on December 31, 2023.

The decrease in contract liabilities from December 31, 2024 to December 31, 2025 was primarily due to the recognition of revenue for fulfilled performance obligations.

We recognized $ 61.2 million of revenue during the year ended December 31, 2025 that

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

was included in the contract liabilities balance on December 31, 2024.

We recognized $ 76.1 million of revenue during the year ended December 31, 2024 that was included in the contract liabilities balance on December 31, 2023.

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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 our racing facilities revenues primarily revolve around live racing events while

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

our 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.

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Within the Gaming segment, revenue is further disaggregated between live and simulcast racing, racing event-related services, gaming, and other services.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

We believe that these disclosures depict how the amount, nature, timing, and uncertainty of cash flows are affected by economic factors.

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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.

NYRA's interest is treated as redeemable noncontrolling interest and is presented outside of permanent equity on the Company’s Consolidated Balance Sheets.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

In August 2025, the Company closed on the purchase of 90 % of the outstanding equity interest 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 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.

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Balance, December 31, 2024 $ 19.7

Redeemable noncontrolling interest initial measurement 20.4

Net income attributable to redeemable noncontrolling interests 2.5

Redemption value adjustment 3.3

Minority holder contributions 0.2

Balance, December 31, 2025 $ 46.1

INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

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The ownership of Rivers Des Plaines is comprised of the following:

(1) the Company owns 61.3 % interest in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Des Plaines, (2) High Plaines Gaming, LLC ("High Plaines"), an affiliate of Rush Street Gaming, LLC owns of 36.0 % of Midwest Gaming, and (3) Casino Investors, LLC own 2.7 % of Midwest Gaming.

(1) the Company owns 61.3 % interest in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Des Plaines, (2) High Plaines Gaming, LLC ("High Plaines"), an affiliate of Rush Street Gaming, LLC owns 36.0 % of Midwest Gaming, and (3) Casino Investors, LLC own 2.7 % of Midwest Gaming.

Both the Company and High Plaines have participating rights over Rivers Des Plaines, and both must consent to certain operating, investing, and financing decisions.

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The Company received distributions from Rivers Des Plaines of $ 68.5 million in 2025, $ 92.2 million in 2024 and $ 111.1 million in 2023.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Miami Valley Gaming

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The Company received distributions from MVG of $ 47.5 million in 2025, $ 46.5 million in 2024 and $ 44.0 million in 2023.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Summarized Financial Results for our Unconsolidated Affiliates

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Net income $ 243.8 $ 251.8 $ 263.1

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Our operating leases with terms greater than one year are primarily related to buildings and land.

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(b) Includes variable lease costs, which were not material.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

Supplemental cash flow information related to leases are as follows:

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Financing cash flows from finance leases 2.9 2.6

ROUAs obtained in exchange for lease obligations

Right-of-use assets obtained in exchange for lease obligations

Operating leases $ 17.6 $ 6.0

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Finance leases 4.8 % 4.9 %

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

As of December 31, 2025, the future undiscounted cash flows associated with the Company's operating and financing lease liabilities were as follows:

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Present value of lease liabilities $ 39.0 $ 27.8

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

BOARD OF DIRECTOR AND EMPLOYEE BENEFIT PLANS

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Our cash contribution to the plan was $ 7.3 million in 2025, $ 6.5 million in 2024, and $ 5.1 million in 2023.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

FAIR VALUE OF ASSETS AND LIABILITIES

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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.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

The carrying amounts and estimated fair values by input level of the Company's financial instruments are as follows:

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We are self-insured up to an aggregate stop loss for our general liability and workers' compensation coverages.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

We review all litigation on an ongoing basis when making accrual and disclosure decisions.

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In the event that a legal proceeding results in a substantial judgment against, 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.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

NET INCOME PER COMMON SHARE COMPUTATIONS

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Net income attributable to Churchill Downs Incorporated $ 383.0 $ 426.8 $ 417.3

Adjustments related to redeemable noncontrolling interest 3.0 — —

Adjustments related to redeemable noncontrolling interests 3.3 3.0 —

Net income attributable to common shareholders $ 379.7 $ 423.8 $ 417.3

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Diluted 71.8 74.6 76.1

Net income per common share data:

Net income attributable to Churchill Downs Incorporated per common share data:

Basic net income $ 5.32 $ 5.73 $ 5.55

Diluted net income $ 5.29 $ 5.68 $ 5.49

All share and per-share amounts have been retroactively adjusted to reflect the effects of the Stock Split.

Refer to Note 9, Shareholders' Equity for further information on the Stock Split.

SEGMENT INFORMATION

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The Wagering Services and Solutions segment includes the revenue and expenses for TwinSpires Horse Racing, our sports betting business, United Tote, and Exacta.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

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

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The retail and online sportsbooks, if applicable, related to Rivers Des Plaines and MVG are included in the Gaming segment.

Churchill Downs Incorporated

Notes to Consolidated Financial Statements

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

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Exacta's system architecture supports multiple game vendors and virtually unlimited math modeling capabilities on a single system enabling Exacta to deliver a diverse gaming library to Company owned and third-party HRM entertainment venues in several states.

The Gaming segment includes revenue and expenses for the wholly owned casino properties and associated racetrack facilities which support the casino license in Florida, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, New York, and Pennsylvania.

The Gaming segment includes revenue and expenses for the wholly owned casino properties and associated racetrack facilities.

The Gaming segment also includes our share of our equity investments in Illinois and Ohio.

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Adjusted EBITDA includes the following adjustments:

Adjusted EBITDA includes our portion of EBITDA from our equity investments.

Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to noncontrolling interests.

Adjusted EBITDA excludes:

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– Acquisition, disposition, and property sale related charges;

– Direct online Sports and Casino business exit costs;

– 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:

– The impact of changes in fair value of interest rate swaps;

– Legal reserves and transaction costs;

• Asset impairments;

• Rivers Des Plaines' impact on our investments in unconsolidated affiliates from legal reserves and transaction costs;

• Asset impairments, net;

• Gain on property sales;

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• Other charges, recoveries, and expenses

As of December 31, 2021, Arlington ceased racing and simulcast operations.

On February 15, 2023, the Company closed on the sale of the property to the Chicago Bears.

Arlington's results and exit costs in 2022 and 2023 are treated as an adjustment.

The property associated with Arlington International Racecourse ("Arlington") was sold on February 15, 2023 to the Chicago Bears.

Arlington's results and exit costs in 2023 are treated as an adjustment.

Churchill Downs Incorporated

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Net income attributable to Churchill Downs Incorporated $ 383.0 $ 426.8 $ 417.3

Net income attributable to noncontrolling interest 2.3 — —

Net income attributable to noncontrolling interests 2.5 2.3 —

Net income 385.5 429.1 417.3

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Other expense, net 10.1 4.2 7.0

Transaction (benefit) expense, net ( 12.1 ) 4.8 42.1

Asset impairments 3.9 24.6 38.3

Transaction expense (benefit), net 5.1 ( 12.1 ) 4.8

Asset impairments, net 47.5 3.9 24.6

Other income, expense:

Interest, depreciation and amortization expense related to equity investments 38.6 42.0 40.2

Changes in fair value of Rivers Des Plaines' interest rate swaps — — ( 12.6 )

Rivers Des Plaines' legal reserves and transactions costs — 0.3 —

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Notes to Consolidated Financial Statements

The table below presents total asset information for each of our segments:

(in millions) 2024 2023

Total assets:

Live and Historical Racing $ 4,143.3 $ 3,872.9

Wagering Services and Solutions 460.6 473.9

Gaming 1,953.7 1,920.9

Total segment assets 6,557.6 6,267.7

All Other 718.3 687.8

$ 7,275.9 $ 6,955.5

The table below presents total capital expenditures for each of our segments:

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Total capital expenditures $ 274.9 $ 547.0 $ 676.5

Our chief operating decision maker does not review disaggregated assets by segment.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

RELATED PARTY TRANSACTIONS

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The repurchase of the shares was funded using available cash and borrowings under the Company’s senior secured credit facility.

SUBSEQUENT EVENTS

On February 14, 2025, the Company closed an amendment of the Credit Agreement.

Refer to Note 11, Debt for further information.

Report of Independent Registered Public Accounting Firm

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Indefinite-Lived Intangible Asset Annual Impairment Assessment – Virginia Gaming Rights Intangible Asset

As described in Notes 2 and 6 to the consolidated financial statements, the Company’s indefinite-lived gaming rights intangible assets balance was $2,225.8 million as of December 31, 2024, of which a majority relates to the Virginia gaming rights intangible asset.

Management performs an annual review for impairment of indefinite-lived intangible assets on April 1 of each fiscal year, or more frequently if events or circumstances indicate that it is more likely than not the relevant asset may be impaired.

If the carrying amount of the gaming rights intangible asset exceeds fair value, an impairment loss is recognized.

Management generally determines the fair value of gaming rights using the Greenfield Method.

The estimated future revenue and operating expenses, start-up costs, and discount rates are the primary assumptions and estimates in the valuation of the gaming rights.

The principal considerations for our determination that performing procedures relating to the indefinite-lived intangible asset annual impairment assessment of the Virginia gaming rights intangible asset is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Virginia gaming rights intangible asset;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimated future revenue and discount rate;

Valuation of the Acquired Casino Salem Gaming Rights Intangible Asset

As described in Note 3 to the consolidated financial statements, on August 27, 2025, the Company completed its acquisition of 90% of Casino Salem for a base purchase price of $180.0 million.

Management recorded a $196.6 million indefinite-lived gaming rights intangible asset, which represented the fair value of the gaming rights at the date of acquisition.

The fair value of the gaming rights acquired was determined using the Greenfield Method, which is an income approach methodology.

The estimated future revenue, future operating expenses, start-up costs, and discount rate were the primary inputs in the valuation.

The principal considerations for our determination that performing procedures relating to the valuation of the acquired Casino Salem gaming rights intangible asset is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the Casino Salem gaming rights intangible asset acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimated future revenue, future operating expenses, and discount rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s indefinite-lived intangible asset impairment assessment, including controls over the valuation of the Virginia

gaming rights intangible asset.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimate of the Virginia gaming rights intangible asset;

(ii) evaluating the appropriateness of the Greenfield Method used by management;

(iii) testing the completeness and accuracy of the underlying data used in the

Greenfield Method;

and (iv) evaluating the reasonableness of the estimated future revenue and discount rate assumptions used by management.

Evaluating the reasonableness of the estimated future revenue assumption involved considering (i) the current and past performance of the Virginia properties;

These procedures included testing the effectiveness of controls relating to accounting for an asset acquisition, including controls over management’s valuation of the Casino Salem gaming rights intangible asset acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the Casino Salem gaming rights intangible asset acquired;

(iii) evaluating the appropriateness of the Greenfield Method used by management;

(iv) testing the completeness and accuracy of the underlying data used in the Greenfield Method;

and (v) evaluating the reasonableness of the significant assumptions used by management related to estimated future revenue, future operating expenses, and discount rate.

Evaluating management’s assumptions related to estimated future revenue and future operating expenses involved considering (i) the current and past performance of similar casino properties;

(ii) the consistency with economic and industry forecasts;

and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Greenfield Method and (ii) the reasonableness of the discount rate assumption.

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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 8. Financial Statements and Supplementary Data