Churchill Downs Incorporated (CDI) said its acquisition of properties from Peninsula Pacific Entertainment (P2E) helped drive the operator to record net revenue in the first quarter.
The operator completed the purchase of substantially all assets in P2E in November last year, having initially agreed a deal in February.
The arrangement included all of P2E’s assets and operations in Virginia, New York and Sioux City, Iowa, with these now operating as part of the enlarged CDI network across the US.
The addition of the properties had a significant impact on CDI’s year-on-year performance in the three months to March 31, with net revenue reaching an all-time high of $559.5m, up 53.7% on the previous year.
Breaking this down, gaming remained the primary source of revenue for CDI, amounting to $250.0m, up 41.0%. CDI put this down to the New York and Iowa properties acquired in the P2E transaction, as well as growth from its sites in Louisiana, Maryland, and Maine.
Live and historical racing revenue also increased 149.3% to $214.4m, driven by the acquired P2E Virginia properties and the opening of Turfway Park in Kentucky in September, as well as year-on-year growth at other venues in Kentucky.
Revenue from the TwinSpires business slipped by 5.5% to $94.8m, primarily due to the decision to exit the direct online sports and casino business in Q1 2022, which was partially offset by incremental revenue from United Tote. All other revenue amounted to €300,000.
In terms of spending, operating expenses across the entire business amounted to $439.6m, an increase of 38.8% on last year. Spending was higher in almost all areas, with the main outgoing being gaming at $173.5m.
CDI noted $64.7m in finance expenses, but also reported $38.3m in equity in income from unconsolidated affiliates and $114.0m worth of gain from the sale of its Arlington venue. This meant an additional $89.0m in income for the business.
As such, pre-tax profit was $208.9m, up 265.5% from $58.6m in 2022, while after paying $53.2m in income tax, net profit was $155.7m, an increase of 269.8% on the previous year.
In addition, CDI noted that adjusted EBITDA climbed 73.5% to a record $222.9m.