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Gaming growth drives CDI to record revenue and net profit for third quarter


Churchill Downs Incorporated (CDI) saw revenue and net profit reach record levels in the third quarter of its 2021 financial year, primarily due to growth across its gaming and live and historical racing operations.

Revenue for the three months to September 30 amounted to $393.0m, up 16.3% year-on-year from $337.8m in the corresponding period last year.

Gaming remained by far the main source of income for CDI, with revenue in this segment climbing 38.8% to $185.6m. CDI said this increase was due to relaxed novel coronavirus (Covid-19) restrictions at its facilities, with these measures having impacted its results in 2020.

Net revenue increased for all gaming properties, with the exception of the Riverwalk and Fair Grounds and VSI, with the latter two having been impacted by Hurricane Ida, which hit Louisiana in August. This led to the temporary closure of Fair Grounds Race Course & Slots and OTBs.

CDI also saw revenue from its live and historical racing business climb 14.6% to $81.5m, helped by the opening of a new historical racing machine (HRM) facility at the Oak Grove Racing, Gaming & Hotel in Kentucky and the installation of 226 additional HRMs at the Newport Racing & Gaming facility, also in Kentucky.

However, revenue from the TwinSpires online sports betting and casino business fell by 19.9% to $102.2m, mainly due to the fact that the comparable quarter last year included the delayed Kentucky Oaks and Kentucky Derby. Both events are usually run in Q2 – as they were this year – but were pushed back as a result of Covid-19.

This meant revenue from horse racing within TwinSpires was $30.9m lower than in 2020, but this was partially offset by a $5.5m rise in sports betting and casino revenue, helped by its expansion into additional states and increased marketing activities.

Other revenue during the quarter amounted to $26.2m, almost double the $13.4m posted in the previous year.

The quarter also saw CDI agree to sell its Arlington International Racecourse in Illinois to NFL franchise the Chicago Bears for $197.2m. The operator announced plans to sell the site – on which the team is likely to pursue plans to build a new stadium – in February.

Turning to costs for Q3 and operating costs were 12.9% higher at $325.4m, and while CDI also reported $21.7m in interest expenses, it saw $41.7m in income from unconsolidated affiliates.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) reached a record $156.1m, up 28.1% on last year, while pre-tax profit also increased by 53.3% to $87.4m.

CDI paid $26.3m in tax during the quarter, leaving it with a record net profit of $61.4m, up 42.1% year-on-year.

In terms of its year-to-date performance, revenue in the nine months through to the end of September was 58.9% higher at $1.23bn.

Operating costs were up 33.1% to $982.7m, but revenue growth meant adjusted EBITDA jumped 141.2% to $141.2m, while a pre-tax loss of $8.7m turned into a $289.9m profit.

CDI paid $84.1m in the nine-month period, leaving a net profit of $205.8m, compared to a $99.0m loss in 2020.