Churchill Downs: Record Revenue Tempered by Sharp Profit Decline

LOUISVILLE, KY – February 25, 2026 – Churchill Downs Incorporated (CDI) today unveiled a financial report for 2025 that presents a complex picture of robust growth and significant, though largely non-operational, challenges. The company celebrated record net revenue and a key measure of operational profitability, driven by an aggressive expansion in its historical racing and gaming footprint. However, these triumphs were juxtaposed with a steep 28% decline in its fourth-quarter net income, a figure that underscores the costs of expansion and the impact of one-time financial adjustments.

For the fourth quarter ending December 31, 2025, the parent company of the Kentucky Derby reported a record $665.9 million in net revenue, a 7% increase over the same period in the prior year. Full-year revenue also grew impressively to $2.93 billion. Adjusted EBITDA, a metric watched closely by investors to gauge core operational performance by excluding items like interest, taxes, and depreciation, also hit record levels, climbing 4% to $247.0 million for the quarter and reaching $1.21 billion for the full year.

A Tale of Two Ledgers

Despite the booming top-line figures, the company’s bottom-line GAAP net income attributable to CDI told a different story. The fourth-quarter figure fell to $51.3 million, or $0.71 per diluted share, a stark contrast to the $71.7 million, or $0.95 per share, reported in the fourth quarter of 2024. For the full year, net income was $383.0 million, down from $426.8 million the previous year.

This divergence between operational growth and reported profit stems primarily from a series of significant non-recurring charges and accounting adjustments. A deep dive into the company's filings reveals the main culprits behind the full-year decline were a $33.0 million after-tax increase in impairment charges, largely tied to gaming rights for its Chasers venue, and millions more in after-tax increases for transaction and pre-opening expenses. These expenses are a direct consequence of CDI’s ambitious growth strategy, reflecting the costs of acquiring and launching new properties.

These one-time financial events, while impactful on the official income statement, are viewed by the company as distinct from the underlying health of its day-to-day business. The strong performance in revenue and Adjusted EBITDA suggests that CDI’s core operations are not only healthy but expanding at a record pace, even as accounting principles require these strategic costs to be reflected on the bottom line.

Betting Big Beyond the Derby

The engine for CDI’s record revenue is its aggressive and successful expansion into regional live and historical racing machine (HRM) markets. The company’s Live and Historical Racing segment was the standout performer, with its fourth-quarter revenue surging by $43.9 million compared to the prior year. This growth is a direct result of strategic investments paying off.

The company’s push into Virginia has been particularly fruitful. The September 2025 opening of the Roseshire Gaming Parlor in Henrico County was a key contributor to a $16.1 million quarterly revenue increase from its Virginia HRM venues. Kentucky remains a stronghold, with its HRM venues adding another $20.8 million in revenue growth during the quarter. This expansion continued with the grand opening of Marshall Yards Racing & Gaming in Southwestern Kentucky on February 25, 2026, marking CDI’s eighth such venue in its home state.

Looking ahead, CDI is doubling down on this strategy with a planned $180-$200 million investment to build the Rockingham Grand Casino in Salem, New Hampshire. With a target opening of mid-2027, the project signals a long-term commitment to diversifying its portfolio and establishing a major presence in the New England gaming market, a significant move for a company once defined almost solely by its iconic racetrack in Louisville.

Navigating Headwinds in Regional Gaming

While the HRM expansion has been a resounding success, CDI’s traditional Gaming segment, which includes more conventional casino properties, faced significant headwinds in specific markets. The segment’s fourth-quarter revenue decreased by $7.2 million, and its Adjusted EBITDA fell by $11.2 million.

A major blow came from Louisiana, where the cessation of HRM operations following a state Supreme Court ruling led to an $8.0 million revenue decrease in the fourth quarter. The court's decision, which found the statute authorizing historical horse racing unconstitutional without prior local voter approval, effectively shut down a lucrative revenue stream for the company’s Fair Grounds property.

In Mississippi, operations were hampered by what the company described as temporary roadwork affecting its Riverwalk property and a local curfew impacting its Harlow's casino. However, these localized issues exist within a broader context of a contracting Mississippi gaming market facing increased competition from neighboring states. The competitive landscape is also heating up in Virginia, where CDI's HRM parlors now face competition from new, full-scale casinos like the Hard Rock in Bristol and Caesars in Danville, which offer a wider array of table games and slots.

Fortifying the Financial Future

To power its ambitious expansion and navigate market challenges, Churchill Downs is leveraging a newly favorable federal tax environment and maintaining a disciplined approach to capital management. The passage of the H.R. 1 tax bill in July 2025 is set to provide a significant boost to the company's cash flow. The legislation retroactively reinstated 100% bonus depreciation, allowing CDI to immediately deduct the full cost of new capital investments, thereby lowering its tax burden and freeing up capital for projects like the Rockingham Grand Casino.

This financial flexibility is complemented by a strong commitment to shareholder returns. In 2025, CDI returned $456.3 million to its shareholders through a combination of $425.3 million in share repurchases and a dividend payment. In a move signaling strong confidence in its financial stability, the company's board approved a 7% dividend increase in October 2025, marking the fifteenth consecutive year the company has raised its annual dividend.