Churchill Downs Inc 10-Q

ITEM 1. FINANCIAL STATEMENTS CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, (in millions, except per common share data) 2026 2025 Net revenue: Live and Historical Racing $ 297 $ 273 Wagering Services and Solutions 109 107 Gaming 257 263 All Other — — Total net revenue 663 643 Operating expense: Live and Historical Racing 199 190 Wagering Services and Solutions 68 67 Gaming 188 192 All Other 5 4 Selling, general and administrative expense 59 55 Transaction expense, net 1 — Total operating expense 520 508 Operating income 143 135 Other (expense) income: Interest expense, net ( 72 ) ( 72 ) Equity in income of unconsolidated affiliates 36 33 Miscellaneous, net 6 — Total other (expense) income ( 30 ) ( 39 ) Income from operations before provision for income taxes 113 96 Income tax provision ( 30 ) ( 19 ) Net income 83 77 Net income attributable to noncontrolling interest — — Net income and comprehensive income attributable to Churchill Downs Incorporated $ 83 $ 77 Net income attributable to Churchill Downs Incorporated per common share data: Basic net income $ 1.16 $ 1.02 Diluted net income $ 1.16 $ 1.02 Weighted average shares outstanding: Basic 70 74 Diluted 70 74 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 3 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions) March 31, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 200 $ 201 Restricted cash 91 88 Accounts receivable, net 99 93 Income taxes receivable 6 17 Other current assets 56 44 Total current assets 452 443 Property and equipment, net 2,910 2,919 Investment in and advances to unconsolidated affiliates 685 685 Goodwill 900 900 Other intangible assets, net 2,516 2,515 Other assets 22 23 Total assets $ 7,485 $ 7,485 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 218 $ 184 Accrued expenses and other current liabilities 397 400 Current deferred revenue 158 55 Current maturities of long-term debt 63 63 Dividends payable — 31 Total current liabilities 836 733 Long-term debt, net of current maturities and loan origination fees 1,783 1,986 Notes payable, net of debt issuance costs 3,082 3,081 Non-current deferred revenue 15 15 Deferred income taxes 539 520 Other liabilities 86 94 Total liabilities 6,341 6,429 Commitments and contingencies Redeemable noncontrolling interest 48 46 Shareholders' equity: Preferred stock — — Common stock 3 — Retained earnings 1,094 1,011 Accumulated other comprehensive loss ( 1 ) ( 1 ) Total Churchill Downs Incorporated shareholders' equity 1,096 1,010 Total liabilities and shareholders' equity $ 7,485 $ 7,485 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 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, 2025 70 $ — $ 1,011 $ ( 1 ) $ 1,010 Net income attributable to Churchill Downs Incorporated 83 83 Taxes paid related to net share settlement of stock awards ( 3 ) ( 3 ) Stock-based compensation 4 4 Other 2 2 Balance, March 31, 2026 70 $ 3 $ 1,094 $ ( 1 ) $ 1,096 Common Stock Retained Earnings Accumulated Other Comprehensive Loss Total Shareholders' Equity (in millions) Shares Amount Balance, December 31, 2024 74 $ — $ 1,085 $ ( 1 ) $ 1,084 Net income attributable to Churchill Downs Incorporated 77 77 Repurchase of common stock ( 1 ) ( 1 ) ( 89 ) ( 90 ) Taxes paid related to net share settlement of stock awards ( 4 ) ( 4 ) Stock-based compensation 5 5 Balance, March 31, 2025 73 $ — $ 1,073 $ ( 1 ) $ 1,072 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 5 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, (in millions) 2026 2025 Cash flows from operating activities: Net income $ 83 $ 77 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 56 59 Distributions from unconsolidated affiliates 36 31 Equity in income of unconsolidated affiliates ( 36 ) ( 33 ) Stock-based compensation 5 4 Deferred income taxes 19 — Amortization of operating lease assets 2 2 Other 2 2 Changes in operating assets and liabilities: Income taxes 11 19 Deferred revenue 103 94 Other assets and liabilities 14 ( 8 ) Net cash provided by operating activities 295 247 Cash flows from investing activities: Capital maintenance expenditures ( 19 ) ( 13 ) Capital project expenditures ( 40 ) ( 67 ) Other ( 2 ) — Net cash used in investing activities ( 61 ) ( 80 ) Cash flows from financing activities: Proceeds from borrowings under long-term debt obligations 245 220 Repayments of borrowings under long-term debt obligations ( 449 ) ( 251 ) Payment of dividends ( 31 ) ( 31 ) Repurchase of common stock — ( 87 ) Taxes paid related to net share settlement of stock awards ( 3 ) ( 4 ) Change in bank overdraft 6 5 Net cash used in financing activities ( 232 ) ( 148 ) Net increase in cash, cash equivalents and restricted cash 2 19 Cash, cash equivalents and restricted cash, beginning of period 289 252 Cash, cash equivalents and restricted cash, end of period $ 291 $ 271 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 6 CHURCHILL DOWNS INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited) Three Months Ended March 31, (in millions) 2026 2025 Supplemental disclosures of cash flow information: Cash paid for interest $ 43 $ 45 Cash paid for income taxes — 1 Cash received from income tax refunds — 1 Schedule of non-cash operating, investing and financing activities: Property and equipment additions included in accounts payable and accrued expenses $ 17 $ 48 Right-of-use assets obtained in exchange for lease obligations in operating leases — 6 Repurchase of common stock included in accrued expense and other current liabilities — 6 The accompanying notes are an integral part of the condensed consolidated financial statements. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 7 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, 2025 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, 2025. 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 has assumed 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. 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 2026 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 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 assessing the impact of this standard on the consolidated financial statements and related disclosures. 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 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 8 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 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. 3. ACQUISITIONS Casino Salem 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 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 $ 197 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. 4. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill was $ 900 million as of March 31, 2026 and December 31, 2025. Other intangible assets are comprised of the following: March 31, 2026 December 31, 2025 (in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Definite-lived intangible assets $ 98 $ ( 44 ) $ 54 $ 96 $ ( 42 ) $ 54 Indefinite-lived intangible assets 2,462 2,461 Total $ 2,516 $ 2,515 The Company is continuing to monitor the current economic conditions and the impacts on the results of operations of Presque Isle Downs and Casino ("Presque Isle") 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. 5. INCOME TAXES The Company’s effective income tax rate of 26.7 % for the three months ended March 31, 2026 was higher than the U.S. federal statutory rate of 21.0 % primarily resulting from the impact of state income taxes and non-deductible expenses. The Company’s effective income tax rate of 19.4 % for the three months ended March 31, 2025 was lower than the U.S. federal statutory rate of 21.0 % primarily resulting from a $ 6 million benefit from the remeasurement of deferred income tax liabilities, as a result of certain entity classification elections that were made in the first quarter of 2025 that decreased income attributable to states with higher tax rates compared to prior year, partially offset by the impact of state income taxes and non-deductible expenses. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 9 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 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 million (the "July 2025 Stock Repurchase Program"). The July 2025 Stock Repurchase Program includes and is not in addition to the $ 169 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 $ 430 million of repurchase authority remaining under the July 2025 Stock Repurchase Program at March 31, 2026, 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 million (the "March 2025 Stock Repurchase Program"). The March 2025 Stock Repurchase Program included and was not in addition to any unspent amount remaining under the prior authorizations from 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. During the three months ended March 31, 2026 and 2025, we repurchased the following shares under our stock repurchase programs: Three Months Ended March 31, (in millions, except share data) 2026 2025 Repurchase Program Shares Aggregate Purchase Price Shares Aggregate Purchase Price July 2025 Stock Repurchase Program — $ — — $ — March 2025 Stock Repurchase Program — — 586,238 65 2021 Stock Repurchase Program — — 212,012 24 Total — $ — 798,250 $ 89 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. 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. No further awards will be granted under 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 $ 5 million for the three months ended March 31, 2026 and $ 4 million for the three months ended March 31, 2025. At March 31, 2026 and December 31, 2025, the Company had $ 11 million and $ 21 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 three months ended March 31, 2026, the Company awarded RSUs to employees, as well as RSUs and PSUs to certain named executive officers ("NEOs"). The vesting criteria for the PSU awards granted in 2026 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 MARCH 31, 2026 10 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) A summary of the RSUs and PSUs granted during 2026 is presented below (units in thousands): Grant Year Award Type Number of Units Awarded (1) Vesting Terms 2026 RSU 218 Vest equally over three service periods ending in 2029 2026 PSU 122 Three -year performance and service period ending in 2028 (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) March 31, 2026 December 31, 2025 Term Loan B-1 due 2028 $ 285 $ 286 Term Loan A due 2029 1,097 1,112 Revolver 469 657 2027 Senior Notes 600 600 2028 Senior Notes 700 700 2030 Senior Notes 1,200 1,200 2031 Senior Notes 600 600 Total debt 4,951 5,155 Current maturities of long-term debt ( 63 ) ( 63 ) Unamortized premium and deferred finance charges ( 23 ) ( 25 ) Total debt, net of current maturities and costs $ 4,865 $ 5,067 Credit Agreement At March 31, 2026, 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"), $ 285 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 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 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 March 31, 2026, that applicable margin was 150 basis points, which was based on the pricing grid in the Credit Agreement. The Company had $ 722 million available borrowing capacity under the Revolver, after consideration of $ 8 million in outstanding letters of credit, as of March 31, 2026. 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 March 31, 2026, the Company's commitment fee rate was 0.25 %. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 11 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 2027 Senior Notes As of March 31, 2026, we had $ 600 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 2027 Indenture. 2028 Senior Notes As of March 31, 2026, we had a total of $ 700 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 million notes issued at par and $ 200 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 2028 Indenture. 2030 Senior Notes As of March 31, 2026, we had $ 1.2 billion in aggregate principal amount of 5.750 % senior unsecured notes that mature on April 1, 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 2030 Indenture. 2031 Senior Notes As of March 31, 2026, we had $ 600 million in aggregate principal amount of 6.750 % senior unsecured notes that mature on May 1, 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 2031 Indenture. 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 raising funds via debt markets. Our ability to raise debt and the terms under which we would fund the obligations are subject to our ability to access the debt markets and other economic conditions. 9. REVENUE FROM CONTRACTS WITH CUSTOMERS Performance Obligations As of March 31, 2026, 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 $ 270 million. The revenue we expect to recognize on these remaining performance obligations is $ 80 million for the remainder of 2026, $ 62 million in 2027, $ 38 million in 2028, and the remainder thereafter. As of March 31, 2026, 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 March 31, 2026 and December 31, 2025, contract assets were not material. As of March 31, 2026 and December 31, 2025, contract liabilities were $ 185 million and $ 80 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 increase was primarily due to deferred revenue related to the 152nd Kentucky Derby. We recognized $ 6 million of revenue during the three months ended March 31, 2026, which was included in the contract liabilities balance at December 31, 2025. We recognized $ 6 million of revenue during the three months ended March 31, 2025, which was included in the contract liabilities balance at December 31, 2024. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 12 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 MARCH 31, 2026 13 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 March 31, (in millions) 2026 2025 Net revenue from external customers: Live and Historical Racing: Churchill Downs Racetrack $ 3 $ 4 Louisville 55 52 Northern Kentucky 36 31 Southwestern Kentucky 44 41 Western Kentucky 19 12 Virginia 133 130 New Hampshire 7 3 Total Live and Historical Racing $ 297 $ 273 Wagering Services and Solutions: $ 109 $ 107 Gaming: Florida $ 24 $ 25 Iowa 24 24 Indiana 33 32 Louisiana 36 45 Maine 25 24 Maryland 21 21 Mississippi 24 25 New York 46 43 Pennsylvania 24 24 Total Gaming $ 257 $ 263 All Other — — Net revenue from external customers $ 663 $ 643 Intercompany net revenues: Live and Historical Racing $ 4 $ 4 Wagering Services and Solutions 9 9 Gaming 5 4 All Other 2 2 Eliminations ( 20 ) ( 19 ) Intercompany net revenue $ — $ — FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 14 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Three Months Ended March 31, 2026 (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 $ 11 $ 81 $ 10 $ 102 $ — $ 102 Historical racing (a) 257 — — 257 — 257 Racing event-related services 1 — 1 2 — 2 Gaming (a) 4 6 218 228 — 228 Other (a) 24 22 28 74 — 74 Total $ 297 $ 109 $ 257 $ 663 $ — $ 663 Three Months Ended March 31, 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 $ 11 $ 80 $ 11 $ 102 $ — $ 102 Historical racing (a) 237 — 9 246 — 246 Racing event-related services 1 — 1 2 — 2 Gaming (a) 3 4 214 221 — 221 Other (a) 21 23 28 72 — 72 Total $ 273 $ 107 $ 263 $ 643 $ — $ 643 (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 $ 16 million for the three months ended March 31, 2026 and $ 14 million for the three months ended March 31, 2025. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 15 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) March 31, 2026 December 31, 2025 Trade receivables $ 33 $ 34 Simulcast and online wagering receivables 40 34 Other receivables 31 30 104 98 Allowance for credit losses ( 5 ) ( 5 ) Total $ 99 $ 93 Other current assets (in millions) March 31, 2026 December 31, 2025 Inventory $ 11 $ 12 Prepaid technology costs 15 7 Prepaid insurance and taxes 8 7 Other prepaid costs 19 14 Insurance deposits and other 3 4 Total $ 56 $ 44 Accrued expenses and other current liabilities Accrued expenses and other current liabilities consisted of the following: (in millions) March 31, 2026 December 31, 2025 Account wagering deposits liability $ 61 $ 68 Accrued salaries and related benefits 34 55 Purses payable 46 40 Accrued interest 76 48 Accrued fixed assets 14 27 Accrued gaming liabilities 35 35 Accrued insurance 17 15 Accrued property taxes 20 15 Current lease liabilities 8 8 Other 86 89 Total $ 397 $ 400 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. 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. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 16 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 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, 2025 $ 46 Redemption value adjustment 2 Balance, March 31, 2026 $ 48 12. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES Investments in and advances to unconsolidated affiliates as of March 31, 2026 and December 31, 2025 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 March 31, 2026 , 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 million. Our investment in Rivers Des Plaines was $ 573 million as of March 31, 2026 and December 31, 2025. The Company received distributions from Rivers Des Plaines of $ 25 million and $ 21 million for the three months ended March 31, 2026 and 2025, 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 $ 112 million as of March 31, 2026 and December 31, 2025. The Company received distributions from MVG of $ 11 million and $ 10 million for the three months ended March 31, 2026 and 2025, respectively. Summarized Financial Results for our Unconsolidated Affiliates Summarized below are the financial results for our unconsolidated affiliates. Three Months Ended March 31, (in millions) 2026 2025 Net revenue $ 216 $ 205 Operating and SG&A expense 137 130 Depreciation and amortization 6 6 Operating income 73 69 Interest and other, net ( 10 ) ( 11 ) Net income $ 63 $ 58 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 17 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) (in millions) March 31, 2026 December 31, 2025 Assets Current assets $ 108 $ 109 Property and equipment, net 312 315 Other assets, net 266 265 Total assets $ 686 $ 689 Liabilities and Members' Deficit Current liabilities $ 112 $ 89 Long-term debt 777 803 Members' deficit ( 203 ) ( 203 ) Total liabilities and members' deficit $ 686 $ 689 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 MARCH 31, 2026 18 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: March 31, 2026 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Restricted cash $ 91 $ 91 $ 91 $ — $ — Financial liabilities: Term Loan B-1 284 285 — 285 — Term Loan A 1,093 1,097 — 1,097 — Revolver 469 469 — 469 — 2027 Senior Notes 599 598 — 598 — 2028 Senior Notes 699 689 — 689 — 2030 Senior Notes 1,191 1,185 — 1,185 — 2031 Senior Notes 593 611 — 611 — December 31, 2025 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Restricted cash $ 88 $ 88 $ 88 $ — $ — Financial liabilities: Term Loan B-1 284 286 — 286 — Term Loan A 1,108 1,112 — 1,112 — Revolver 657 657 — 657 — 2027 Senior Notes 599 599 — 599 — 2028 Senior Notes 699 696 — 696 — 2030 Senior Notes 1,190 1,211 — 1,211 — 2031 Senior Notes 593 622 — 622 — 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 MARCH 31, 2026 19 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 March 31, (in millions, except per share data) 2026 2025 Numerator for basic and diluted net income per common share: Net income attributable to Churchill Downs Incorporated $ 83 $ 77 Adjustments related to redeemable noncontrolling interest 2 1 Net income attributable to common shareholders $ 81 $ 76 Denominator for net income per common share: Basic 70 74 Plus dilutive effect of stock awards — — Diluted 70 74 Net income per common share data: Basic net income $ 1.16 $ 1.02 Diluted net income $ 1.16 $ 1.02 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, as applicable in each period: Adjusted EBITDA includes our portion of EBITDA from our equity investments and the portion of EBITDA attributable to a noncontrolling interest. Adjusted EBITDA excludes: • 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 MARCH 31, 2026 20 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 March 31, (in millions) 2026 2025 Live and Historical Racing $ 297 $ 273 Wagering Services and Solutions 109 107 Gaming 257 263 All Other — — Net Revenue $ 663 $ 643 FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 21 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Adjusted EBITDA by segment is comprised of the following: Three Months Ended March 31, 2026 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Revenues $ 301 $ 118 $ 262 Pari-mutuel taxes and purses ( 76 ) ( 4 ) ( 11 ) Gaming taxes ( 2 ) — ( 75 ) Marketing and advertising ( 12 ) ( 2 ) ( 8 ) Salaries and benefits ( 36 ) ( 8 ) ( 43 ) Content expense ( 1 ) ( 43 ) ( 1 ) Selling, general and administrative expense ( 11 ) ( 4 ) ( 12 ) Maintenance, insurance and utilities ( 12 ) ( 2 ) ( 10 ) Gaming equipment rental and technology costs ( 14 ) ( 1 ) ( 4 ) Food and beverage costs ( 4 ) — ( 5 ) Other operating expense (1) ( 20 ) ( 9 ) ( 17 ) Equity in income of unconsolidated affiliates — — 46 Other income — — 1 Adjusted EBITDA $ 113 $ 45 $ 123 Three Months Ended March 31, 2025 (in millions) Live and Historical Racing Wagering Services and Solutions Gaming Revenues $ 277 $ 116 $ 267 Pari-mutuel taxes and purses ( 72 ) ( 4 ) ( 15 ) Gaming taxes ( 2 ) — ( 72 ) Marketing and advertising ( 14 ) ( 1 ) ( 8 ) Salaries and benefits ( 32 ) ( 8 ) ( 44 ) Content expense ( 1 ) ( 44 ) ( 2 ) Selling, general and administrative expense ( 11 ) ( 5 ) ( 11 ) Maintenance, insurance and utilities ( 10 ) ( 1 ) ( 9 ) Gaming equipment rental and technology costs ( 12 ) ( 1 ) ( 4 ) Food and beverage costs ( 4 ) — ( 4 ) Other operating expense (1) ( 17 ) ( 11 ) ( 17 ) Equity in income of unconsolidated affiliates — — 43 Other income — — — Adjusted EBITDA $ 102 $ 41 $ 124 (1) Other operating expense primarily includes supplies, regulatory licenses and fees, property taxes, and third-party service fees and costs. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 22 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) Three Months Ended March 31, (in millions) 2026 2025 Reconciliation of Comprehensive Income to Adjusted EBITDA: Net income and comprehensive income attributable to Churchill Downs Incorporated $ 83 $ 77 Net income attributable to noncontrolling interest — — Net income 83 77 Adjustments: Depreciation and amortization 56 59 Interest expense 72 72 Income tax provision 30 19 Stock-based compensation expense 5 4 Pre-opening expense 3 4 Other expenses, net 2 — Transaction expense, net 1 — Other income, expense: Interest, depreciation and amortization expense related to equity investments 9 10 Other charges and recoveries, net ( 4 ) — Total adjustments 174 168 Adjusted EBITDA $ 257 $ 245 Adjusted EBITDA by segment: Live and Historical Racing $ 113 $ 102 Wagering Services and Solutions 45 41 Gaming 123 124 Total segment Adjusted EBITDA 281 267 All Other ( 24 ) ( 22 ) Total Adjusted EBITDA $ 257 $ 245 The table below presents total capital expenditures for each of our segments: Three Months Ended March 31, (in millions) 2026 2025 Capital expenditures: Live and Historical Racing $ 50 $ 67 Wagering Services and Solutions 5 7 Gaming 4 5 Total segment capital expenditures 59 79 All Other — 1 Total capital expenditures $ 59 $ 80 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. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 23 Churchill Downs Incorporated Notes to Condensed Consolidated Financial Statements (Unaudited) 17. SUBSEQUENT EVENTS On April 21, 2026 the Company announced that it entered into a definitive agreement to acquire the intellectual property, including all trademarks and associated rights, of the Preakness Stakes and Black-Eyed Susan Stakes (the “Preakness IP Rights”) from 1/ST Maryland LLC, an affiliate of 1/ST Racing, for a purchase price of $ 85 million, subject to customary closing conditions. The Preakness IP Rights are subject to an Exclusive License Agreement pursuant to which the Company will license to the State of Maryland the intellectual property rights necessary to conduct the running of the Preakness Stakes and Black-Eyed Susan Stakes in exchange for an annual fee. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026 24