Earnings

Churchill Downs Posts Record $80 Million Profit, But Racing Unit Earnings Slip On Virginia Pressure

The Kentucky Derby operator also approved a $750 million buyback and a 7% dividend increase alongside its third-quarter results.

Matteo Parrino Jonathan Ponciano

Matteo Parrino, Jonathan Ponciano

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Churchill Downs Posts Record $80 Million Profit, But Racing Unit Earnings Slip On Virginia Pressure

Churchill Downs, the Kentucky Derby operator that also runs historical racing and casino businesses, reported record third-quarter net income of $80 million, or $1.15 a diluted share, against $38 million and $0.54 a year earlier. Most of the jump is a comparison effect: the prior-year quarter carried a one-time, non-cash impairment, and its Live and Historical Racing unit earned less on Virginia competition and a new tax.

A jump that is mostly comparison

The company said that excluding the one-time, non-cash impairment and an insurance recovery from the third quarter of 2025, net income attributable to Churchill Downs rose $10 million, or 26%. The prior-year impairment was a $35 million after-tax charge tied to the Chasers gaming rights.

Net revenue hit a record $696 million, up $13 million, or 2%. Record Adjusted EBITDA, the company's adjusted earnings measure before interest, taxes, depreciation and amortization, was $264 million, up $2 million, or 1%. Excluding the prior-year insurance recovery, it rose $6 million, or 2%.

Gaming Adjusted EBITDA rose to $128 million from $123 million, helped by equity stakes in Rivers Des Plaines in Illinois and Miami Valley Gaming in Ohio. Wagering Services and Solutions edged up to $48 million from $46 million.

Virginia drags on racing earnings

Live and Historical Racing, the company's largest segment by revenue, saw Adjusted EBITDA fall to $111 million from $116 million even as revenue rose to $315 million from $305 million. Kentucky historical racing venues added $6 million of EBITDA.

That was outweighed by a $6 million decline at Virginia venues, driven by a $10 million drop in Central Virginia. The company blamed increased competition there and a $5 million new tax expense on live race days under a racing and historical racing tax structure that took effect July 1, 2026. A $4 million one-time insurance recovery in the prior-year quarter for a Northern Virginia venue also made the comparison harder, and New Hampshire fell $1 million after a temporary casino closed during construction of a new venue.

The company said it received approval to relocate and expand its Rosie's Collinsville venue to 150 machines within Henry County, Virginia.

Buyback, dividend and new debt

The board approved a new repurchase program of up to $750 million, which includes the $306 million left under the prior authorization as of October 27. The company bought back 570,169 shares for $48 million in the quarter.

The board also declared an annual dividend of $0.469 a share, up 7% and the sixteenth consecutive annual increase, payable January 5, 2027 to holders of record December 4, 2026.

Net bank leverage, a measure of debt against earnings, ended the quarter at 3.8x. The company took on a new $500 million term loan due September 2033 at SOFR plus 175 basis points, and extended its revolver and Term Loan A maturity to September 2031 from July 2029. It also closed its purchase of 49% of United Tote from NYRA on August 3 and extended NYRA's tote services agreement through 2035.

Management hosts a conference call Thursday at 9 a.m. ET to discuss the results.

Sources

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