Churchill Downs Incorporated (CDI), the horse racing track operator, reported record adjusted profits before interest, taxes, depreciation, and amortization (EBITDA) in the third quarter. The company also declared that its takeover of Peninsula Pacific Entertainment (P2E) is nearing finalization.
During the third quarter, CDI remained active in marketing and acquisitions, finalizing a series of transactions. These included the $79 million acquisition of Ellis Park Racetrack and Gaming Facility in Kentucky, which was completed at the end of the quarter.
CDI also agreed to sell a 49% stake in its joint venture pari-mutuel company subsidiary to the New York Racing Association (NYRA). The company also finished the previously announced acquisition of the Chase Poker Room in Salem, New Hampshire.
Furthermore, CDI entered into a significant multi-year partnership with FanDuel Group, a subsidiary of Flutter Entertainment. This partnership covers multiple areas of the operator’s business, including sports betting, advance deposit wagering (ADW), and television sectors.
Following the release of its third-quarter financial results, CDI also provided an update on its ongoing acquisition of P2E assets. This deal was agreed upon earlier this year for $2.49 billion (£2.15 billion/€2.48 billion).
CDI has secured regulatory authorization from Iowa and Virginia, but the finalization of the acquisition is still contingent upon other standard closing stipulations, including approval from the New York State Gaming Commission. Nevertheless, CDI anticipates the deal to be completed by the end of 2022.
Specifically, CDI reported that third-quarter income declined by 2.5% year-on-year to $383.1 million. Gaming remained the primary source of income, with a slight uptick of 0.1% to $185.9 million, driven by growth in fairgrounds and ocean income.
Income from the TwinSpires online betting division decreased by 1.5% to $107.4 million, as horse racing income rose by $1.8 million, surpassing the $3.4 million decline in sports and casino income, due to CDI’s decision to withdraw from direct online sports and casino operations in the first quarter.
Live and historical horse racing income surged by 25.6% to $102.4 million, fueled by higher income at Churchill Downs Racetrack due to more live race days, but other income plummeted by 94.2% as Arlington did not have live racing, as CDI terminated its racing and simulcast operations at the end of 2021.
Operational expenses decreased marginally to $320.1 million, down 1.6% year-on-year, while equity income from non-consolidated subsidiaries of $42.4 million outweighed interest expense, leading to a $10.4 million increase in profit.
Pre-tax profit dropped by 16.3% to $73.4 million, and after paying $16.4 million in taxes, net profit was $57 million, down 7.2% year-on-year.
The firms modified earnings before interest, taxes, depreciation, and amortization for the three-month period reached a record peak of $163.2 million, indicating a 4.6% rise compared to the same period last year.
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