SEGMENT INFORMATION

We manage our operations through six operating segments:


•	Racing, which includes Churchill Downs, Arlington International Race Course ("Arlington"), Fair Grounds Race Course ("Fair Grounds") and Calder;


•	Casinos, which includes Oxford Casino ("Oxford"), Riverwalk Casino ("Riverwalk"), Harlow's Casino ("Harlow’s"), Calder Casino, Fair Grounds Slots, Video Services, LLC ("VSI"), 50% of EBITDA from our joint venture, MVG, and 25% of EBITDA from our equity investment, SCH, which includes investments in Saratoga's New York facility and Saratoga's Colorado facility;


•	TwinSpires, which includes TwinSpires.com, Fair Grounds Account Wagering ("FAW"), Velocity, Bloodstock Research Information Services ("BRIS"), Bluff and I-Gaming;


•	Big Fish Games, which is a global producer and distributor of social casino, casual and mid-core free-to-play, and premium paid games for PC, Mac and mobile devices;


•	Other Investments, which includes United Tote and Capital View Casino & Resort Joint Venture ("Capital View"); and


•	Corporate, which includes miscellaneous and other revenue, compensation expense, professional fees and other general and administrative expense not allocated to our other operating segments.

Eliminations include the elimination of intersegment transactions. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy and allocate resources. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, adjusted for the following:

Adjusted EBITDA includes our portion of the EBITDA from our equity investments.

Adjusted EBITDA excludes:


•	Acquisition expense, net which includes:


•	Acquisition-related charges, including fair value adjustments related to earnouts and deferred payments; and


•	Transaction expense, including legal, accounting, and other deal-related expense;


•	Stock-based compensation expense;


•	Calder land sale;


•	Calder exit costs; and


•	Other charges and recoveries.

During 2016, we updated our definition of Adjusted EBITDA to exclude changes in Big Fish Games deferred revenue and to exclude depreciation and amortization from our equity investments. The prior year amounts were reclassified to conform to this presentation. We also prospectively implemented a change in accounting estimate for corporate expense allocated to other operating segments to use an activity based allocation rather than a revenue based allocation.

We utilize the Adjusted EBITDA metric because we believe the inclusion or exclusion of certain non-recurring items is necessary to provide a more accurate measure of our core operating results and enables 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 U.S. generally accepted accounting principles. 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 Consolidated Statements of Comprehensive Income.

The tables below present net revenue from external customers and intercompany revenue from each of our operating segments, Adjusted EBITDA by segment and reconciles Comprehensive Income to Adjusted EBITDA:



	Years Ended December 31,
(in millions)	2016			2015			2014
Net revenue from external customers:
Racing:
Churchill Downs	$	155.2		$	151.1		$	143.2
Arlington	55.3			54.4			60.3
Fair Grounds	38.0			39.8			38.6
Calder	2.6			2.7			19.3
Total Racing	251.1			248.0			261.4
Casinos:
Oxford Casino	84.6			80.4			76.5
Riverwalk Casino	46.1			49.8			50.1
Harlow’s Casino	48.4			49.0			50.2
Calder Casino	79.1			77.4			77.0
Fair Grounds Slots	36.9			39.0			40.8
VSI	36.9			36.9			33.7
Saratoga	0.8			0.4			—
Total Casinos	332.8			332.9			328.3
TwinSpires	220.6			200.2			191.0
Big Fish Games:
Social casino	182.5			193.4			7.6
Casual and mid-core free-to-play	212.7			125.3			2.1
Premium	91.0			95.0			4.2
Total Big Fish Games	486.2			413.7			13.9
Other Investments	16.9			16.6			16.5
Corporate	1.0			0.9			1.1
Net revenue from external customers	$	1,308.6		$	1,212.3		$	812.2
Intercompany net revenue:
Racing:
Churchill Downs	$	10.0		$	7.8		$	7.0
Arlington	5.5			5.1			5.8
Fair Grounds	1.5			1.3			1.1
Calder	—			—			0.7
Total Racing	17.0			14.2			14.6
TwinSpires	1.3			1.1			1.0
Other Investments	3.9			3.5			4.1
Eliminations	(22.2		)	(18.8		)	(19.7		)
Intercompany net revenue	$	—		$	—		$	—

Adjusted EBITDA by segment is comprised of the following:



	Year Ended December 31, 2016
(in millions)	Racing			Casinos			TwinSpires			Big Fish Games			Other Investments			Corporate
Net revenue	$	268.1		$	332.8		$	221.9		$	486.2		$	20.8		$	1.0

Taxes & purses	(64.2		)	(110.9		)	(11.7		)	—			—			—
Platform & development fees	—			—			—			(179.9		)	—			—
Marketing & advertising	(4.6		)	(12.7		)	(6.3		)	(127.9		)	—			—
Salaries & benefits	(40.9		)	(50.8		)	(9.4		)	(25.0		)	(10.9		)	—
Content expense	(15.6		)	—			(107.6		)	—			—			—
SG&A expense	(16.2		)	(21.2		)	(11.9		)	(18.5		)	(3.4		)	(8.6		)
Research & development	—			—			—			(39.0		)	—			—
Other operating expense	(47.4		)	(39.1		)	(19.8		)	(15.9		)	(4.1		)	(0.6		)
Other income (expense)	0.5			27.7			—			(0.9		)	0.3			0.2

Adjusted EBITDA	$	79.7		$	125.8		$	55.2		$	79.1		$	2.7		$	(8.0	)



	Year Ended December 31, 2015
(in millions)	Racing			Casinos			TwinSpires			Big Fish Games			Other Investments			Corporate
Net revenue	$	262.2		$	332.9		$	201.3		$	413.7		$	20.1		$	0.9

Taxes & purses	(63.6		)	(109.9		)	(10.6		)	—			—			—
Platform & development fees	—			—			—			(143.6		)	—			—
Marketing & advertising	(6.1		)	(12.4		)	(4.8		)	(107.7		)	—			—
Salaries & benefits	(39.2		)	(49.7		)	(9.9		)	(22.3		)	(11.1		)	—
Content expense	(14.6		)	—			(97.9		)	—			—			—
SG&A expense	(16.6		)	(24.1		)	(11.5		)	(16.8		)	(2.5		)	(6.3		)
Research & development	—			—			—			(39.4		)	—			—
Other operating expense	(50.9		)	(41.3		)	(18.0		)	(14.8		)	(3.8		)	1.1
Other income (expense)	0.6			19.4			—			(0.6		)	0.2			0.1

Adjusted EBITDA	$	71.8		$	114.9		$	48.6		$	68.5		$	2.9		$	(4.2	)



	Year Ended December 31, 2014
(in millions)	Racing			Casinos			TwinSpires			Big Fish Games			Other Investments			Corporate
Net revenue	$	276.0		$	328.3		$	192.0		$	13.9		$	20.6		$	1.1

Taxes & purses	(72.7		)	(108.0		)	(9.2		)	—			—			—
Platform & development fees	—			—			—			(5.1		)	—			—
Marketing & advertising	(6.1		)	(12.5		)	(4.7		)	(5.7		)	—			—
Salaries & benefits	(45.1		)	(49.1		)	(11.5		)	(2.6		)	(11.8		)	(0.2		)
Content expense	(19.0		)	—			(92.6		)	—			—			—
SG&A expense	(18.4		)	(25.5		)	(13.0		)	(0.8		)	(2.8		)	(5.3		)
Research & development	—			—			—			—			—			—
Other operating expense	(54.1		)	(43.5		)	(21.2		)	(0.4		)	(4.5		)	(0.7		)
Other income (expense)	0.6			17.5			—			—			0.1			0.1

Adjusted EBITDA	$	61.2		$	107.2		$	39.8		$	(0.7	)	$	1.6		$	(5.0	)



	Years Ended December 31,
(in millions)	2016			2015			2014
Reconciliation of Comprehensive Income to Adjusted EBITDA:

Comprehensive income	$	107.5		$	64.7		$	46.3
Foreign currency translation, net of tax	(0.2		)	0.5			0.1
Net change in pension benefits, net of tax	0.8			—			—
Net income	108.1			65.2			46.4
Additions:
Depreciation and amortization	108.6			109.7			68.3
Interest expense	43.7			28.6			20.8
Income tax provision	60.0			46.9			30.1
EBITDA	$	320.4		$	250.4		$	165.6

Adjustments to EBITDA:
Selling, general and administrative:
Stock-based compensation expense	18.9			13.8			11.9
Other charges	2.5			—			(0.4		)
TwinSpires operating expense	—			—			3.2
Other income, expense:
Interest, depreciation and amortization expense related to equity investments	10.0			8.5			8.7
Other charges and recoveries, net	0.5			(5.8		)	2.6
Acquisition expense, net	3.4			21.7			10.2
Gain on Calder land sale	(23.7		)	—			—
Calder exit costs	2.5			13.9			2.3
Total adjustments to EBITDA	14.1			52.1			38.5
Adjusted EBITDA	$	334.5		$	302.5		$	204.1

Adjusted EBITDA by segment:
Racing	$	79.7		$	71.8		$	61.2
Casinos	125.8			114.9			107.2
TwinSpires	55.2			48.6			39.8
Big Fish Games	79.1			68.5			(0.7		)
Other Investments	2.7			2.9			1.6
Corporate	(8.0		)	(4.2		)	(5.0		)
Adjusted EBITDA	$	334.5		$	302.5		$	204.1

The table below presents information about earnings (losses) from equity investments, net included in our reported segments:



	Years Ended December 31,
(in millions)	2016		2015		2014
Casinos	$	17.4	$	10.9	$	8.9
TwinSpires	—		—		(0.1		)
Other Investments	—		0.3		(2.5		)
	$	17.4	$	11.2	$	6.3

The table below presents total asset information for each of our operating segments:



	As of December 31,
(in millions)	2016		2015
Total assets:
Racing	$	454.6	$	437.1
Casinos	628.7		631.3
TwinSpires	209.9		202.4
Big Fish Games	893.8		947.1
Other Investments	11.1		12.2
Corporate	56.3		47.3
	$	2,254.4	$	2,277.4

The table below presents total capital expenditures for each of our operating segments:



	Years Ended December 31,
(in millions)	2016		2015		2014
Capital expenditures:
Racing	$	26.1	$	12.3	$	33.9
Casinos	13.9		18.8		7.7
TwinSpires	7.0		4.3		5.8
Big Fish Games	5.5		6.4		0.1
Other Investments	1.0		0.8		5.3
Corporate	1.2		0.9		1.7
	$	54.7	$	43.5	$	54.5