We manage our operations through six operating segments:


•	Racing, which includes Churchill Downs Racetrack ("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, 50% equity investment in Ocean Downs and 25% of EBITDA from our equity investment, SCH, which includes investments in Saratoga Casino Hotel, Saratoga Casino Black Hawk and Ocean Downs;


•	TwinSpires, which includes TwinSpires.com, Fair Grounds Account Wagering, Velocity, BetAmerica, Bloodstock Research Information Services, Bluff Media and Churchill Downs Interactive 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 other minor investments; 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;


•	Gain on Calder land sale;


•	Calder exit costs; and


•	Other charges and recoveries.

During the fourth quarter of 2016, we updated our definition of Adjusted EBITDA to exclude changes in Big Fish Games deferred revenue. Effective January 1, 2017, certain revenue previously included in our Corporate segment was deemed by management to be more closely aligned with our TwinSpires segment. The prior year amounts were reclassified to conform to this presentation.

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. GAAP. 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:



	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Net revenue from external customers:
Racing:
Churchill Downs	$	136.7	$	129.1	$	139.0	$	131.4
Arlington	18.0		16.8		26.5		25.8
Fair Grounds	10.0		9.5		22.5		23.8
Calder	0.6		0.7		1.2		1.3
Total Racing	165.3		156.1		189.2		182.3
Casinos:
Oxford Casino	23.1		21.1		44.0		41.0
Riverwalk Casino	12.0		12.4		23.5		25.1
Harlow’s Casino	12.5		11.9		26.0		24.9
Calder Casino	21.8		20.5		43.2		40.8
Fair Grounds Slots	8.8		8.8		19.0		19.4
VSI	9.8		9.5		19.5		19.3
Saratoga	0.3		0.2		0.6		0.4
Total Casinos	88.3		84.4		175.8		170.9
TwinSpires	80.5		68.4		132.5		118.0
Big Fish Games:
Social casino	49.5		46.5		95.7		94.0
Casual and mid-core free-to-play	43.9		56.0		89.2		106.4
Premium	19.2		22.7		39.7		46.9
Total Big Fish Games	112.6		125.2		224.6		247.3
Other Investments	5.2		4.4		9.3		8.4
Net revenue from external customers	$	451.9	$	438.5	$	731.4	$	726.9



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Intercompany net revenue:
Racing:
Churchill Downs	$	8.4		$	7.0		$	8.7		$	7.3
Arlington	1.9			1.6			2.9			2.6
Fair Grounds	0.1			—			1.0			1.0
Total Racing	10.4			8.6			12.6			10.9
TwinSpires	0.3			0.3			0.6			0.6
Other Investments	1.3			1.4			2.7			2.3
Eliminations	(12.0		)	(10.3		)	(15.9		)	(13.8		)
Intercompany net revenue	$	—		$	—		$	—		$	—

Adjusted EBITDA by segment is comprised of the following:



	Three Months Ended June 30, 2017
(in millions)	Racing			Casinos			TwinSpires			Big Fish Games			Other Investments			Corporate
Net revenue	$	175.7		$	88.3		$	80.8		$	112.6		$	6.5		$	—

Taxes & purses	(32.9		)	(29.7		)	(4.1		)	—			—			—
Platform & development fees	—			—			—			(40.4		)	—			—
Marketing & advertising	(2.2		)	(3.0		)	(4.6		)	(28.0		)	—			—
Salaries & benefits	(13.5		)	(13.4		)	(2.6		)	(6.9		)	(3.3		)	—
Content expense	(4.7		)	—			(40.2		)	—			—			—
SG&A expense	(4.2		)	(5.6		)	(3.0		)	(5.1		)	(0.7		)	(1.8		)
Research & development	—			—			—			(9.9		)	—			—
Other operating expense	(20.0		)	(9.8		)	(7.0		)	(3.6		)	(1.2		)	(0.3		)
Other income (expense)	0.5			10.7			—			(0.4		)	—			—

Adjusted EBITDA	$	98.7		$	37.5		$	19.3		$	18.3		$	1.3		$	(2.1	)



	Three Months Ended June 30, 2016
(in millions)	Racing			Casinos			TwinSpires			Big Fish Games			Other Investments			Corporate
Net revenue	$	164.7		$	84.4		$	68.7		$	125.2		$	5.8		$	—

Taxes & purses	(30.3		)	(28.1		)	(2.0		)	—			—			—
Platform & development fees	—			—			—			(45.9		)	—			—
Marketing & advertising	(1.9		)	(3.1		)	(3.2		)	(37.1		)	—			—
Salaries & benefits	(12.7		)	(12.7		)	(2.3		)	(6.1		)	(2.8		)	—
Content expense	(4.8		)	—			(33.5		)	—			—			—
SG&A expense	(4.0		)	(5.3		)	(2.8		)	(4.3		)	(0.9		)	(2.2		)
Research & development	—			—			—			(9.7		)	—			—
Other operating expense	(19.9		)	(9.7		)	(6.1		)	(4.0		)	(1.0		)	—
Other income (expense)	0.2			7.8			—			(0.3		)	0.2			(0.1		)

Adjusted EBITDA	$	91.3		$	33.3		$	18.8		$	17.8		$	1.3		$	(2.3	)



	Six Months Ended June 30, 2017
(in millions)	Racing			Casinos			TwinSpires			Big Fish Games			Other Investments			Corporate
Net revenue	$	201.8		$	175.8		$	133.1		$	224.6		$	12.0		$	—

Taxes & purses	(43.1		)	(58.8		)	(7.1		)	—			—			—
Platform & development fees	—			—			—			(81.9		)	—			—
Marketing & advertising	(2.9		)	(6.0		)	(5.6		)	(52.5		)	—			—
Salaries & benefits	(22.1		)	(26.5		)	(4.8		)	(13.9		)	(6.2		)	—
Content expense	(7.9		)	—			(65.6		)	—			—			—
SG&A expense	(8.0		)	(10.8		)	(5.7		)	(9.8		)	(1.5		)	(4.0		)
Research & development	—			—			—			(20.2		)				—
Other operating expense	(29.3		)	(21.2		)	(11.8		)	(7.3		)	(2.5		)	(0.5		)
Other income (expense)	0.5			20.3			—			(0.4		)	0.1			—

Total segment Adjusted EBITDA	$	89.0		$	72.8		$	32.5		$	38.6		$	1.9		$	(4.5	)



	Six Months Ended June 30, 2016
(in millions)	Racing			Casinos			TwinSpires			Big Fish Games			Other Investments			Corporate
Net revenue	$	193.2		$	170.9		$	118.6		$	247.3		$	10.7		$	—

Taxes & purses	(41.5		)	(56.5		)	(4.8		)	—			—			—
Platform & development fees	—			—			—			(90.0		)	—			—
Marketing & advertising	(2.7		)	(6.5		)	(4.2		)	(79.9		)	—			—
Salaries & benefits	(21.1		)	(24.8		)	(4.6		)	(12.2		)	(5.5		)	—
Content expense	(8.1		)	—			(57.4		)	—			—			—
SG&A expense	(7.9		)	(10.4		)	(5.6		)	(9.2		)	(1.6		)	(4.0		)
Research & development	—			—			—			(20.5		)	—			—
Other operating expense	(28.3		)	(19.4		)	(11.1		)	(7.9		)	(1.7		)	(0.3		)
Other income (expense)	0.3			14.3			—			(0.9		)	0.2			—

Total segment Adjusted EBITDA	$	83.9		$	67.6		$	30.9		$	26.7		$	2.1		$	(4.3	)



	Three Months Ended June 30,						Six Months Ended June 30,
(in millions)	2017			2016			2017			2016
Reconciliation of Comprehensive Income to Adjusted EBITDA:

Comprehensive income	$	78.0		$	70.0		$	85.2		$	72.8
Foreign currency translation, net of tax	0.3			(0.2		)	0.4			(0.2		)
Net income	78.3			69.8			85.6			72.6
Additions:
Depreciation and amortization	24.8			26.9			49.3			53.9
Interest expense	11.6			11.1			23.4			21.7
Income tax provision	47.5			41.7			52.0			37.9
EBITDA	162.2			149.5			210.3			186.1

Adjustments to EBITDA:
Selling, general and administrative:
Stock-based compensation expense	6.7			5.3			11.7			9.4
Other charges	—			0.3			0.1			0.3
Other income, expense:
Interest, depreciation and amortization expense related to equity investments	3.1			2.5			6.6			5.0
Other charges and recoveries, net	—			—			—			0.4
Acquisition expense, net	0.8			1.1			1.0			3.8
Calder exit costs	0.2			1.5			0.6			1.9
Total adjustments to EBITDA	10.8			10.7			20.0			20.8
Adjusted EBITDA	$	173.0		$	160.2		$	230.3		$	206.9

Adjusted EBITDA by segment:
Racing	$	98.7		$	91.3		$	89.0		$	83.9
Casinos	37.5			33.3			72.8			67.6
TwinSpires	19.3			18.8			32.5			30.9
Big Fish Games	18.3			17.8			38.6			26.7
Other Investments	1.3			1.3			1.9			2.1
Corporate	(2.1		)	(2.3		)	(4.5		)	(4.3		)
Adjusted EBITDA	$	173.0		$	160.2		$	230.3		$	206.9

The table below presents information about equity in income (losses) of unconsolidated investments included in our reported segments:



	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2017		2016		2017		2016
Casinos	$	7.7	$	4.7	$	13.8	$	8.8
Other Investments	—		0.1		—		(0.2		)
	$	7.7	$	4.8	$	13.8	$	8.6

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



(in millions)	June 30, 2017		December 31, 2016
Total assets:
Racing	$	453.2	$	454.6
Casinos	659.8		628.7
TwinSpires	207.5		209.9
Big Fish Games	890.9		893.8
Other Investments	10.1		11.1
Corporate	60.5		56.3
	$	2,282.0	$	2,254.4

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



	Six Months Ended June 30,
(in millions)	2017		2016
Capital expenditures:
Racing	$	38.4	$	20.7
Casinos	15.6		6.8
TwinSpires	5.2		3.7
Big Fish Games	3.5		2.2
Other Investments	0.7		0.5
Corporate	0.6		0.6
	$	64.0	$	34.5