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Segment Information
 6 Months Ended
Jun. 30, 2022
Segment Reporting [Abstract]  
Segment Information SEGMENT INFORMATION
We manage our operations through three reportable segments:
•Live and Historical Racing
The Live and Historical Racing segment includes live and historical pari-mutuel racing related revenue and expenses at Churchill Downs Racetrack, Derby City Gaming, Oak Grove, Turfway Park, and Newport.
Churchill Downs Racetrack is the home of the Kentucky Derby and conducts live racing during the year. Derby City Gaming is an historical racing machine ("HRM") facility that operates under the Churchill Downs pari-mutuel racing license at its ancillary training facility in Louisville, Kentucky. Oak Grove conducts live harness racing during the year and operates a HRM facility under its pari-mutuel racing license. Turfway Park conducts live racing during the year, and Newport is an ancillary HRM facility that operates under the Turfway Park pari-mutuel racing license.
Our Live and Historical Racing properties earn commissions primarily from pari-mutuel wagering on live and historical races; simulcast fees earned from other wagering sites; admissions, personal seat licenses, sponsorships, television rights, and other miscellaneous services (collectively "racing event-related services"), as well as food and beverage services.
•TwinSpires
The TwinSpires segment includes the revenue and expenses for the online horse racing and the retail and online Sports and Casino business.
TwinSpires Horse Racing operates online horse racing wagering for TwinSpires.com, BetAmerica.com, and other white-label platforms; facilitates high dollar wagering by international customers (through Velocity); and provides the Bloodstock Research Information Services platform for horse racing statistical data. Also included in TwinSpires Horse Racing is our United Tote business which provides totalisator services to patrons who wager on horse races.
Our TwinSpires Sports and Casino business includes the retail and online sports and casino gaming operations.
Our TwinSpires Sports and Casino business operates our sports betting and casino platform in multiple states. The TwinSpires Sports and Casino business includes the mobile and online sports betting and casino results and the results
of seven of our retail sportsbooks, which include our wholly-owned properties at Harlow’s Casino Resort and Spa ("Harlow’s"), Presque Isle, Riverwalk Casino Hotel (“Riverwalk”), Ocean Downs Casino and Racetrack ("Ocean Downs"), Fair Grounds Racecourse and Slots, as well as in Arizona and Michigan which utilize a third party's casino license. On February 24, 2022 the Company announced its plans to exit the direct online sports and casino business and pursue monetization of its online market access licenses.
•Gaming
The Gaming segment includes revenue and expenses for the casino properties and associated racetrack facilities which support the casino license. The Gaming segment has approximately 11,000 slot machines and video lottery terminals ("VLTs") and 200 table games located in eight states.
The Gaming segment revenue and Adjusted EBITDA includes the following properties:
◦Calder
◦Fair Grounds and VSI
◦Harlow’s
◦Lady Luck Casino Nemacolin ("Lady Luck Nemacolin") management agreement
◦Ocean Downs
◦Oxford Casino and Hotel ("Oxford")
◦Presque Isle
◦Riverwalk
The Gaming segment Adjusted EBITDA also includes the Adjusted EBITDA related to the Company’s equity investments in the following:
◦61.3% equity investment in Rivers Des Plaines
◦50% equity investment in MVG
The Gaming segment generates revenue and expenses from slot machines, table games, VLTs, video poker, retail sports betting, ancillary food and beverage services, hotel services, commission on pari-mutuel wagering, racing event-related services, historical racing, and / or other miscellaneous operations.
We have aggregated the following businesses as well as certain corporate operations, and other immaterial joint ventures in "All Other" to reconcile to consolidated results:
•Arlington
•Corporate
We conduct our business through these reportable segments and report net revenue and operating expense associated with these reportable segments in the accompanying condensed Consolidated Statements of Comprehensive Income. Eliminations include the elimination of intersegment transactions. We utilize non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment performance, develop strategy and allocate resources. Adjusted EBITDA includes the following adjustments:
Adjusted EBITDA includes our portion of EBITDA from our equity investments.
Adjusted EBITDA excludes:
•Transaction expense, net which includes:
–Acquisition, disposition, and land sale related charges;
–Direct online Sports and Casino business costs; and
–Other transaction expense, including legal, accounting, and other deal-related expense;
•Stock-based compensation expense;
•Rivers Des Plaines' impact on our investments in unconsolidated affiliates from:
–The impact of changes in fair value of interest rate swaps; and
–Legal reserves and transaction costs;
•Asset impairments;
•Gain on Calder land sale;
•Legal reserves;
•Pre-opening expense; and
•Other charges, recoveries and expenses
As of December 31, 2021, Arlington ceased racing and simulcast operations given the pending sale of the property to the Chicago Bears. Arlington's operating loss in the current quarter and year is treated as an adjustment to EBITDA and is included in Other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.
We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enable 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 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 Condensed Consolidated Statements of Comprehensive Income.
The tables below present net revenue from external customers and intercompany revenue from each of our segments, net revenue from external customers for each group of similar services, Adjusted EBITDA by segment, and a reconciliation of comprehensive income to Adjusted EBITDA:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Net revenue from external customers:
Live and Historical Racing:
Churchill Downs Racetrack$174.2 $105.2 $176.2 $107.2 
Derby City Gaming44.2 39.9 87.0 72.8 
Oak Grove34.1 25.6 64.5 45.0 
Turfway Park1.0 0.7 5.5 5.2 
Newport7.4 4.5 13.7 8.9 
Total Live and Historical Racing260.9 175.9 346.9 239.1 
TwinSpires:
Horse Racing130.6 132.4 220.6 228.9 
Sports and Casino6.2 8.4 16.5 15.4 
Total TwinSpires136.8 140.8 237.1 244.3 
Gaming:
Fair Grounds and VSI37.2 35.1 78.7 73.4 
Presque Isle30.3 30.5 57.5 54.3 
Ocean Downs27.4 27.0 48.7 47.0 
Calder27.9 27.4 54.9 48.3 
Oxford29.4 24.6 56.2 40.3 
Riverwalk 14.0 18.4 28.4 32.8 
Harlow’s 12.0 16.6 25.1 30.6 
Lady Luck Nemacolin6.1 6.4 12.1 11.3 
Total Gaming184.3 186.0 361.6 338.0 
All Other0.5 12.4 1.0 18.0 
Net revenue from external customers$582.5 $515.1 $946.6 $839.4 
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Intercompany net revenue:
Live and Historical Racing$15.0 $14.6 $16.2 $16.1 
TwinSpires1.7 1.8 2.83.3
Gaming0.2 — 2.1 2.0 
All Other— 2.4 — 4.0 
Eliminations(16.9)(18.8)(21.1)(25.4)
Intercompany net revenue$— $— $— $— 
Three Months Ended June 30, 2022
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$46.5 $118.4 $5.5 $170.4 $— $170.4 
Historical racing(a)
78.4 — 1.3 79.7 — 79.7 
Racing event-related services121.9 — 0.2 122.1 — 122.1 
Gaming(a)
— 6.2 158.1 164.3 — 164.3 
Other(a)
14.1 12.2 19.2 45.5 0.5 46.0 
Total$260.9 $136.8 $184.3 $582.0 $0.5 $582.5 
Three Months Ended June 30, 2021
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$39.6 $121.6 $4.4 $165.6 $9.5 $175.1 
Historical racing(a)
64.9 — — 64.9 — 64.9 
Racing event-related services63.5 — 0.2 63.7 1.9 65.6 
Gaming(a)
— 8.4 170.2 178.6 — 178.6 
Other(a)
7.9 10.8 11.2 29.9 1.0 30.9 
Total$175.9 $140.8 $186.0 $502.7 $12.4 $515.1 
(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in Other revenue with a corresponding offset recorded as a reduction in historical Pari-mutuel revenue for HRMs or Gaming revenue for our casino properties. These amounts were $7.7 million for the three months ended June 30, 2022 and $5.2 million for the three months ended June 30, 2021.
Six Months Ended June 30, 2022
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$52.1 $199.9 $18.4 $270.4 $— $270.4 
Historical racing(a)
152.0 — 1.3 153.3 — 153.3 
Racing event-related services122.4 — 0.6 123.0 — 123.0 
Gaming(a)
— 16.5 309.0 325.5 — 325.5 
Other(a)
20.4 20.7 32.3 73.4 1.0 74.4 
Total$346.9 $237.1 $361.6 $945.6 $1.0 $946.6 
Six Months Ended June 30, 2021
(in millions)Live and Historical RacingTwinSpiresGamingTotal SegmentsAll OtherTotal
Net revenue from external customers
Pari-mutuel:
Live and simulcast racing$45.5 $210.8 $16.1 $272.4 $14.6 $287.0 
Historical racing(a)
117.8 — — 117.8 — 117.8 
Racing event-related services63.5 — 0.9 64.4 1.9 66.3 
Gaming(a)
— 15.4 302.7 318.1 — 318.1 
Other(a)
12.3 18.1 18.3 48.7 1.5 50.2 
Total$239.1 $244.3 $338.0 $821.4 $18.0 $839.4 
(a) Food and beverage, hotel, and other services furnished to customers for free as an inducement to wager or through the redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in Other revenue with a corresponding offset recorded as a reduction in historical Pari-mutuel revenue for HRMs or Gaming revenue for our casino properties. These amounts were $14.8 million for the six months ended June 30, 2022 and $8.9 million for the six months ended June 30, 2021.
Adjusted EBITDA by segment is comprised of the following:
Three Months Ended June 30, 2022
(in millions)Live and Historical RacingTwinSpiresGaming
Net revenue$275.9 $138.5 $184.5 
Taxes and purses(59.6)(7.2)(68.2)
Marketing and advertising(6.4)(5.0)(3.7)
Salaries and benefits(18.9)(6.9)(23.5)
Content expense(1.0)(68.1)(2.2)
Selling, general and administrative expense(3.0)(2.6)(6.7)
Other operating expense(23.2)(14.8)(22.2)
Other income 0.1 — 48.8 
Adjusted EBITDA$163.9 $33.9 $106.8 
Three Months Ended June 30, 2021
(in millions)Live and Historical RacingTwinSpiresGaming
Net revenue$190.5 $142.6 $186.0 
Taxes and purses(50.8)(8.3)(70.0)
Marketing and advertising(4.9)(16.7)(2.5)
Salaries and benefits(15.3)(6.8)(20.6)
Content expense(0.8)(68.5)(1.3)
Selling, general and administrative expense(3.1)(2.9)(5.9)
Other operating expense(17.3)(14.8)(17.7)
Other income 0.1 — 51.8 
Adjusted EBITDA$98.4 $24.6 $119.8 
Adjusted EBITDA by segment is comprised of the following:
Six Months Ended June 30, 2022
(in millions)Live and Historical RacingTwinSpiresGaming
Net revenue$363.1 $239.9 $363.7 
Taxes and purses(86.4)(14.7)(135.5)
Marketing and advertising(9.3)(10.1)(7.2)
Salaries and benefits(29.8)(13.6)(47.4)
Content expense(1.6)(111.2)(3.7)
Selling, general and administrative expense(6.3)(5.2)(13.3)
Other operating expense(38.0)(27.1)(42.2)
Other income 0.1 — 83.5 
Adjusted EBITDA$191.8 $58.0 $197.9 
Six Months Ended June 30, 2021
(in millions)Live and Historical RacingTwinSpiresGaming
Net revenue$255.2 $247.6 $340.0 
Taxes and purses(70.8)(14.7)(129.3)
Marketing and advertising(7.0)(25.2)(3.9)
Salaries and benefits(25.3)(13.0)(40.5)
Content expense(1.4)(115.0)(2.3)
Selling, general and administrative expense(6.1)(5.5)(11.9)
Other operating expense(28.0)(26.5)(33.2)
Other income 0.1 — 83.3 
Adjusted EBITDA$116.7 $47.7 $202.2 
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Reconciliation of Comprehensive Income to Adjusted EBITDA:
Net income and comprehensive income $339.3 $108.3 $381.4 $144.4 
Additions:
Depreciation and amortization26.1 26.0 51.2 52.0 
Interest expense35.1 22.0 56.4 41.4 
Income tax provision 140.6 41.6 157.1 57.8 
EBITDA$541.1 $197.9 $646.1 $295.6 
Adjustments to EBITDA:
Stock-based compensation expense $7.4 $7.1 $14.4 $12.6 
Legal reserve3.2 — 3.2 — 
Pre-opening expense2.6 1.5 4.7 2.1 
Other expenses, net1.8 0.2 4.3 0.2 
Asset impairments— 11.2 4.9 11.2 
Transaction expense, net1.2 — 6.2 0.1 
Other income, expense:
Interest, depreciation and amortization expense related to equity investments10.5 10.5 21.6 20.1 
Changes in fair value of Rivers Des Plaines' interest rate swaps(2.2)(1.8)(12.6)(6.0)
Rivers Des Plaines' legal reserves and transaction costs0.2 6.7 0.5 8.0 
Other charges— — 1.0 — 
Gain on Calder land sale(274.6)— (274.6)— 
Total adjustments to EBITDA(249.9)35.4 (226.4)48.3 
Adjusted EBITDA$291.2 $233.3 $419.7 $343.9 
Adjusted EBITDA by segment:
Live and Historical Racing$163.9 $98.4 $191.8 $116.7 
TwinSpires33.9 24.6 58.0 47.7 
Gaming106.8 119.8 197.9 202.2 
Total segment Adjusted EBITDA304.6 242.8 447.7 366.6 
All Other(13.4)(9.5)(28.0)(22.7)
Total Adjusted EBITDA$291.2 $233.3 $419.7 $343.9 
The table below presents information about equity in income of unconsolidated affiliates included in our reported segments:
Three Months Ended June 30,Six Months Ended June 30,
(in millions)2022202120222021
Gaming$40.5 $36.4 $73.0 $61.3 
The table below presents total asset information for each of our segments:
(in millions) June 30, 2022December 31, 2021
Total assets:
Live and Historical Racing$810.8 $682.7 
TwinSpires296.1 289.6 
Gaming1,288.7 1,003.3 
Total segment assets2,395.6 1,975.6 
All Other2,224.0 1,006.0 
Total assets$4,619.6 $2,981.6 
The table below presents total capital expenditures for each of our segments:
Six Months Ended June 30,
(in millions)20222021
Capital expenditures, net:
Live and Historical Racing$119.8 $16.9 
TwinSpires6.0 4.8 
Gaming40.4 6.5 
Total segment capital expenditures166.2 28.2 
All Other0.9 1.4 
Total capital expenditures$167.1 $29.6