Churchill Downs, Incorporated · NASDAQ:CHDN

Churchill Downs — Investor Presentation (June 2024)

69 slides from Churchill Downs's investor presentation, June 2024

1. Slide 1: Investor Presentation

   Investor Presentation June 2024

2. Slide 2: Forward-Looking Statements

   Forward-Looking Statements Certain statements made in this presentation contain various “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by the use of terms suc

3. Slide 3: Table of Contents

   Table of Contents  Business Overview and Case for Investing  Segment Overviews: – Live and Historical Racing – TwinSpires – Gaming  Capital Management  ESG  Appendix 3

4. Slide 4: Business Overview and Case for Investing

   Business Overview and Case for Investing 4

5. Slide 5: Churchill Downs Incorporated ("CDI") Overview

   Business Overview Churchill Downs Incorporated (“CDI”) Overview We have a unique and diverse collection of entertainment assets that generate high margins with significant Adjusted EBITDA and Free Cash Flow Churchill Downs Historical Racing TwinSpires Gaming Racetrack (“CDRT”) Machines (“HRMs”) Kent

6. Slide 6: Case for Investing

   Case for Investing Case for Investing Diverse Organic Strong Financial The Kentucky Derby Growth Profile  Iconic and irreplaceable asset  Expansion of HRM properties in  Strong free cash flow generation Kentucky,Virginia, New Hampshire, with disciplined maintenance Louisiana, and other states cap

7. Slide 7: The Kentucky Derby is Only the Beginning

   Case for Investing The Kentucky Derby is Only the Beginning Live and Historical Racing Gaming Kentucky Virginia Collinsville Colonial Downs/ New Kent Dumfries Emporia Hampton Richmond Vinton Notes: 1. The Rose Gaming Resort in Virginia is expected to open in late 3Q’24. 2. Owensboro Racing & Gaming

8. Slide 8: Strong 2023 Performance

   Case for Investing Strong 2023 Performance 36% Annual Revenue Growth from 2022 to 2023 $ in millions All Other & Racing Eliminations 34% Annual Adj. EBITDA Growth from 2022 to 2023 $ in millions Racing 8

9. Slide 9: Strong 1Q'24 Performance

   Case for Investing Strong 1Q’24 Performance 6% Quarterly Revenue Growth from 1Q’23 to 1Q’24 $ in millions All Other & Racing Eliminations 9% Quarterly Adj. EBITDA Growth from 1Q’23 to 1Q’24 $ in millions 9 Racing

10. Slide 10: One of a Kind Portfolio

    Case for Investing One of a Kind Portfolio Adjusted EBITDA1 Adj. $ in billions EBITDA $0.3 $1.0 Growth: Segment Growth Drivers: 31% 46% Live and Historical Racing Segment: Live and Historical Racing 47% +383%  HRM expansion in Kentucky and Virginia  Kentucky Derby growth TwinSpires 25% TwinSpires

11. Slide 11: Summary of Project Capital Investments

    Project Capital Investments Summary of Project Capital Investments Target Planned Spend Project Completion ($ Millions) The Kentucky Churchill Downs Racetrack April 2025 $60-$80 Derby Northern Virginia – The Rose Gaming Resort Late 3Q’24 $460 Virginia – Additional ~560 Machines TBD TBD Historical Ra

12. Slide 12: On-Going Capital Investments at Churchill Downs Racetrack

    Announced Project Capital Investments On-Going Capital Investments at Churchill Downs Racetrack Potential Major Future Projects:  Renovate additional reserved seating areas  Hotel  Infield seating Backside Stables Big Board Backside Stables First Turn Infield General Skye Terrace Mansion & Admiss

13. Slide 13: Virginia Development Rights

    Announced Project Capital Investments Virginia Development Rights The Rose Gaming Resort  The Rose Gaming Resort is located ~30 miles south of Washington DC off I-95 – ~170K average daily traffic volume, per Virginia Department of Transportation – ~6.5 million people in the Northern Virginia & Wash

14. Slide 14: Western Kentucky Strategy

    Announced Project Capital Investments Western Kentucky Strategy Ellis Park Racing & Gaming Owensboro Racing & Gaming  Ellis Park, located in Henderson, Kentucky, serves  Owensboro Racing & Gaming will be located with the Western Kentucky market and is convenient access to Highway 60 and ~6 miles a

15. Slide 15: New Hampshire HRM Strategy

    Announced Project Capital Investments New Hampshire HRM Strategy Chasers  Located in Salem, New Hampshire – Approximately 30 minutes from downtown Boston – The Boston Metro Area (Boston-Cambridge-Newton) has a population of ~4.9 million people  Chasers is one of the leading New Hampshire charitabl

16. Slide 16: Live and Historical Racing Segment

    Live and Historical Racing Segment 16

17. Slide 17: Kentucky Live and Historical Racing Overview

    Live and Historical Racing Segment Kentucky Live and Historical Racing Overview Four racetracks in Kentucky with six HRM facilities Live Racing KY Historical Racing Facilities Total Segment Key Metrics Churchill Downs Derby City Gaming Home of the $ in millions 2023 1Q’24 Kentucky Derby Derby City G

18. Slide 18: The Kentucky Derby Overview

    The Kentucky Derby The Kentucky Derby Overview The Kentucky Derby utilizes the magic and mystique of Churchill Downs to create unique experiences for our guests 18

19. Slide 19: The Kentucky Derby - By The Numbers

    The Kentucky Derby The Kentucky Derby - By The Numbers Significant broadcast interest creates long-term support for iconic entertainment event Most Widely Distributed Derby in History on a Global Scale  20.1 million peak viewership, highest since 1989  16.7 million average viewership  NBC broadca

20. Slide 20: The Kentucky Derby - By The Numbers

    The Kentucky Derby The Kentucky Derby - By The Numbers Industry-Leading Purses Contribute to Broad Ranging In-Person Appeal Consistent Growth in All-Sources Wagering Kentucky Oaks & Kentucky Derby Purses Age Range of $ in millions $5 Derby Attendees1 18 to 34 29% 35 to 54 31% $2 55 to 64 20% $1.5 $1

21. Slide 21: The Celebration Leading Up to the Kentucky Derby

    The Kentucky Derby The Celebration Leading Up to the Kentucky Derby Various non-affiliated organizations celebrate the Kentucky Derby Kentucky Derby Museum Fillies Derby Ball Thunder Over Louisville An all-day party to kick off the An evening of dinner, dancing, The largest annual fireworks countdow

22. Slide 22: The Lead Up to the Kentucky Derby

    The Kentucky Derby The Lead Up to the Kentucky Derby 22

23. Slide 23: A Premier International Sporting & Entertainment Event

    The Kentucky Derby A Premier International Sporting & Entertainment Event Derby Week Revenue Kentucky Derby Growth Strategy Broadcast Other Leverage unique experiences and make License / Sponsorship strategic capital investments  Enhance guest experience to enable pricing differentiation for reserv

24. Slide 24: Investing Capital in Unique Experiences

    The Kentucky Derby Investing Capital in Unique Experiences Capital Enhance Investments Guest Enable Price to Enable Experience Differentiation Segmentation Conversion to all-inclusive 2021 experience for all reserved    seating 2022 Homestretch Club    2023 First Turn Experience    2024 Pad

25. Slide 25: Paddock Project at Churchill Downs Racetrack

    The Kentucky Derby Paddock Project at Churchill Downs Racetrack Enhanced the Paddock experience for nearly every guest for the 150th Kentucky Derby in May 2024  Up to $200 million with a payback period of < 8 years  Redesign improved the flow of guests throughout the Paddock - Larger paddock walki

26. Slide 26: Sponsorship Strategy

    The Kentucky Derby Sponsorship Strategy Building relationships with sponsors targeting luxury, lifestyle and technology categories for both onsite experiences and Derby parties around the globe  Partners include Woodford Reserve, SAP, Longines, Ford, FanDuel, Sports Illustrated, and White Claw  Ma

27. Slide 27: International Growth Strategy

    The Kentucky Derby International Growth Strategy Three unique Roads to the Derby for a horse to qualify in one of 20 coveted Derby starting positions United States Japan Europe Horses compete for a Horses compete for one Horses compete for one Derby starting position Derby starting position Derby st

28. Slide 28: HRM Business

    Historical Horse Racing Machines HRM Business A historical horse racing machine (“HRM”) is a gaming device that uses the results of previously run horse races to approximate the gaming experience of Class II and Class III machines  Top game titles / themes are from Aristocrat, Light and Wonder, Int

29. Slide 29: HRM Business

    Historical Horse Racing Machines HRM Business In Virginia, Colonial Downs is the only entity eligible to operate HRMs in the state and is permitted to operate HRMs at up to 10 “satellite facilities” with a statewide limit of 5,000 HRMs  Seven facilities acquired in the P2E transaction currently wit

30. Slide 30: HRM Entertainment Venues - Kentucky

    Historical Horse Racing Machines HRM Entertainment Venues - Kentucky Nine racing licenses have been awarded by the Kentucky Horse Racing Commission and are each allowed to have a main facility and one “annex” facility with HRMs within a 60 mile radius of the licensed racetrack  CDI holds four racin

31. Slide 31: Churchill Downs Racetrack and Derby City Gaming

    Historical Horse Racing Machines Churchill Downs Racetrack and Derby City Gaming Derby City Gaming & Hotel  Operates as Churchill Downs Racetrack’s ancillary training facility in Louisville, Kentucky  HRM entertainment venue includes: Opened Sep. 2018 Dec. 2023 – Center bar with large format telev

32. Slide 32: Oak Grove Racing, Gaming & Hotel

    Historical Horse Racing Machines Oak Grove Racing, Gaming & Hotel Oak Grove Racing, Gaming & Hotel Annex  Located off of Hwy 24 on the KY / TN border  ~55 miles from Nashville, Tennessee (MSA pop. ~2.1 Opened Sep. 2020 million)  Near Fort Campbell, the second largest military base in the Total in

33. Slide 33: Turfway Park Racing & Gaming and Newport Racing & Gaming

    Historical Horse Racing Machines Turfway Park Racing & Gaming and Newport Racing & Gaming Turfway Park Racing & Gaming  Located in Northern Kentucky  ~10 miles to Cincinnati, OH (MSA pop. ~2.3 million) Opened Sept. 2022 Oct. 2020  Opened September 1, 2022 Total investment  HRM entertainment venu

34. Slide 34: Ellis Park Racing & Gaming and Owensboro Racing & Gaming

    Historical Horse Racing Machines Ellis Park Racing & Gaming and Owensboro Racing & Gaming Ellis Park Racing & Gaming  Located off of Interstate 69 on the KY / IN border  ~5 miles from Evansville, Indiana  Facility includes: Opened 1922 1Q’25 – Thoroughbred racetrack – Retail sports betting Total

35. Slide 35: HRM Entertainment Venues – Virginia

    Historical Horse Racing Machines HRM Entertainment Venues – Virginia Western Region Northern Virginia Central Virginia Southern Virginia Virginia Colonial Rosie’s The Rose Location Richmond Downs Hampton Emporia Collinsville Vinton (Dumfries) (Dumfries) (New Kent) Opened Jan. 2021 Late 3Q’24 Jun. 20

36. Slide 36: TwinSpires Segment

    TwinSpires Segment 36 CHURCHILL DOWNS

37. Slide 37: TwinSpires Growth Strategy

    TwinSpires TwinSpires Growth Strategy Grow core TwinSpires horse racing customers  Leverage linkage to Kentucky Derby to efficiently acquire customers  Utilize in-house development team to continue to enhance superior technology platform  Utilize analytics on customer behavior to drive efficient

38. Slide 38: Acquisition of Exacta Systems

    Acquisition of Exacta Systems Acquisition of Exacta Systems CDI acquired Exacta Systems on August 22, 2023 for $250 million  Business overview – Provider of technology to support historical horse racing (“HRM”) operations: • CDI HRM operations in Virginia, Kentucky, and New Hampshire • Third-party

39. Slide 39: Horse Racing Industry Handle and Online Wagering

    TwinSpires Horse Racing Horse Racing Industry Handle and Online Wagering Online wagering on horse racing has grown significantly since 2019 U.S.Thoroughbred Horse Racing Handle1 U.S.Thoroughbred Horse Racing Handle1 $ in billions 2.2% $ in billions (4)% $12.1 $2.7 $11.7 CAGR $2.6 $11.0 $6.4 $6.6 53%

40. Slide 40: TwinSpires Handle Growth

    TwinSpires Horse Racing TwinSpires Handle Growth TwinSpires Horse Racing handle1 has also grown significantly since 2019 $ in millions 8% $ in millions $1,959 $1,992 CAGR $411 $420 $1,456 2019 2022 2023 1Q'23 1Q'24 VPY: (0)% +2% VPY: +2% V’19: +34% +37% V’19: +38% 1 TwinSpires handle excludes Veloci

41. Slide 41: TwinSpires Horse Racing

    TwinSpires Horse Racing TwinSpires Horse Racing TwinSpires Horse Racing business is a well-proven, profitable, and growing platform built on pari-mutuel wagering economics 24/7/365 Wagering in 16 Countries with Strategic Advantages ~165,000 Races at 360 Racetracks Linkage to the Kentucky Derby  Ine

42. Slide 42: TwinSpires B2B Growth Strategy – FanDuel and DraftKings Agreements

    TwinSpires TwinSpires B2B Growth Strategy – FanDuel and DraftKings Agreements FanDuel DraftKings  Agreement began in January 2023  DraftKings launched DK HORSE in March 2023  FanDuel created a fully integrated and seamless ahead of the 149th running of the Kentucky wagering experience with a sing

43. Slide 43: TwinSpires Sports and Casino Strategy

    TwinSpires Sports and Casino TwinSpires Sports and Casino Strategy CDI will maintain its retail sportsbooks and monetize online market access rights Jurisdiction CDI Property Illinois Rivers Des Plaines Equity Investment1 Indiana Terre Haute Casino Resort Iowa Hard Rock Hotel and Casino Sioux City2

44. Slide 44: Gaming Segment

    Gaming Segment 44 CHURCHILL DOWNS

45. Slide 45: Regional Gaming Properties

    Gaming Segment Regional Gaming Properties Diverse portfolio of gaming properties Strategic Advantages Local approach Key Metrics  Unique brands and marketing strategies  Menus and offerings reflect local tastes $ in millions 2023 1Q’24  Promotions catered to local customer base  Loyal player bas

46. Slide 46: Wholly-Owned Gaming Properties

    Gaming Properties Wholly-Owned Gaming Properties Ten wholly-owned regional gaming properties Slots1 & Video Hotel Retail State Property Acres Tables1 Racetrack Poker / Rooms Sportsbook VLTs1 FL Calder Casino 54 1,080 6 - - - Hard Rock Hotel & Casino IA Sioux City 15 660 20 - 54  IN Terre Haute Casi

47. Slide 47: Terre Haute Casino Resort

    Gaming Properties Terre Haute Casino Resort Built the new Terre Haute Casino Resort  Located ~70 miles southwest of Indianapolis, Indiana  Up to $290 million investment  Entertainment amenities include: – 1,000 slot machines – 36 table games – High-limit gaming lounge – 122-room luxury hotel – Si

48. Slide 48: Equity Investments

    Gaming Properties Equity Investments Rivers Casino Des Plaines (61% Ownership) Miami Valley Gaming (50% Ownership)  Premier location on 21 acres in Des Plaines, IL  Located on 120 acres in Lebanon, OH (North of (~17 mi. from Chicago) Cincinnati, south of Dayton)  ~2,000 positions1,2 (1,520 slot m

49. Slide 49: Capital Management

    Capital Management 49 CHURCHILL DOWNS

50. Slide 50: Capital management philosophy based on creating long-term shareholder value

    Capital Management Capital management philosophy based on creating long-term shareholder value Maintain broad and expedient access to the capital markets  Ideal target is 3.0x-4.0x bank covenant net leverage - willing to go higher for a strategic investment Engage in open and active dialogue with r

51. Slide 51: Capital Projects

    Capital Management Capital Projects Projected Capital Investments Capital 2023 Actuals 2024 Outlook Maintenance $78 million $90 - $105 million Project $599 million $450 - $550 million  Churchill Downs  Terre Haute  Churchill Downs  Terre Haute  DCG Downtown  The Rose  Ellis / Owensboro  Virg

52. Slide 52: M&A and Organic Capital Investments are a Core Discipline of Our Team

    Capital Management M&A and Organic Capital Investments are a Core Discipline of Our Team Disciplined M&A  Rivers Casino Des Plaines  P2E: ~7.8x multiple including tax benefits, < 7.8x after realizing synergies from the Exacta transaction – Provides substantial scale and expands historical racing g

53. Slide 53: CDI has returned over $1.9 billion of capital to shareholders since 2015

    Capital Management CDI has returned over $1.9 billion of capital to shareholders since 2015 Dividends  January 2024 was the 13th consecutive increase in the dividend per share  Over $230 million paid to shareholders in dividends since 20151 Share Repurchases  Returned nearly $1.7 billion to share

54. Slide 54: Churchill Downs Incorporated vs. S&P 500 10-Year Relative Growth

    Capital Management Churchill Downs Incorporated vs. S&P 500 10-Year Relative Growth 5-Year Relative Growth CAGR 5-Year 10-Year CHDN 20% 26% +144% S&P 500 13% 11% +871% +84% Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 Jun-24 +177% As of June 12, 2024 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun

55. Slide 55: Environmental, Social, and Governance

    Environmental, Social, and Governance 55

56. Slide 56: CDI Approach to Environment, Social and Governance ("ESG")

    ESG CDI Approach to Environment, Social and Governance (“ESG”) ESG Committee established to lead ESG initiatives  Cross-functional team led by CFO  CDI’s Nominating & Governance Committee provides oversight to the Committee and CDI leadership regarding CDI’s ESG strategy  Oversight of CDI’s respo

57. Slide 57: CDI Approach to Responsible Gaming

    ESG CDI Approach to Responsible Gaming CDI is committed to promoting responsible gaming at all of our properties and online, for all of our products and services Team Members Customers and Guests We provide the knowledge and skills regarding: We provide information regarding:  Importance of respons

58. Slide 58: CDI Approach to Equine and Jockey Health and Safety

    ESG CDI Approach to Equine and Jockey Health and Safety CDI is committed to protecting and furthering equine and jockey health and safety at all of our racetracks Horseracing Integrity and Safety Act (HISA)  Independent body responsible for implementing national standards for medication usage and r

59. Slide 59: CDI Approach to the Environment

    ESG CDI Approach to the Environment We have ongoing initiatives at our properties:  To lessen energy and water usage  To decrease our carbon emissions  To responsibly manage waste Examples of these initiatives include:  We are committed to installing LED lighting in all of our newly constructed

60. Slide 60: CDI Approach to Social

    ESG CDI Approach to Social CDI is investing in the communities in which we operate  CDI contributes over $5.0 million annually via grants and in-kind donations to over 750 organizations  Each year, CDI donates tickets and experiences to nonprofit fundraising auctions, resulting in > $2.5 million r

61. Slide 61: CDI Approach to Governance

    ESG CDI Approach to Governance Strong Board of Directors – nine highly qualified members that play a vital role in the direction of CDI  8 of 9 directors are independent  Fully independent Audit and Compensation committees  3 of 8 independent directors are a woman or diverse  Board includes fina

62. Slide 62: Appendix

    Appendix 62 CHURCHILL DOWNS

63. Slide 63: Management Team

    Appendix Management Team Bill Carstanjen Chief Executive Officer  Chief Executive Officer since Aug. 2014; Director since 2015  President and COO, Mar. 2011 – Aug. 2014; COO, Jan. 2009 – Mar. 2011  EVP, General Counsel & Chief Development Officer, July 2005 – Dec. 2008  Former Executive of GE 

64. Slide 64: Board of Directors

    Appendix Board of Directors Alex Rankin Chairman of the Board  Independent Chairman since 2018  Director since 2008  Chairman of the Board of Sterling G. Thompson Company, LLC  President of Upson Downs Farm, Inc.  Chairman of James Graham Brown Foundation Bill Carstanjen  CEO since 2014; Direc

65. Slide 65: Board of Directors (continued)

    Appendix Board of Directors (continued) Andréa Carter  Director since 2022  Senior Executive Vice President and Chief Human Resources Officer for Global Payments, Inc. in Atlanta  Extensive human resources executive experience with Habitat for Humanity, Ralph Lauren, Newell Rubbermaid, and The Ho

66. Slide 66: Board of Directors (continued)

    Appendix Board of Directors (continued) Daniel Harrington  Director since 1998  Chair of Compensation Committee  President and CEO of HTV Industries, Inc.  Extensive financial, accounting, and Chief Executive experience Karole Lloyd  Director since 2018  Chair of Audit Committee and serves on

67. Slide 67: CDI Racetrack Overview

    Appendix CDI Racetrack Overview Churchill Ellis Colonial Presque Isle Turfway Fair Miami Valley Oak Ocean Racetrack Downs Park Downs Downs Park Grounds Gaming Grove Downs Louisville, Henderson, New Kent, Erie, Florence, New Orleans, Lebanon, Oak Grove, Berlin, Location Kentucky Kentucky Virginia Pen

68. Slide 68: Definition of Non-GAAP Financial Measures

    Definition of Non-GAAP Financial Measures In addition to the results provided in accordance with GAAP, Churchill Downs Incorporated (the “Company”, “we”, “our”) also uses non-GAAP measures, including EBITDA (earnings before interest, taxes, depreciation and amortization) and Adjusted EBITDA. The Com

69. Slide 69: Reconciliation of Comprehensive Income to Adjusted EBITDA

    Reconciliation from GAAP to Non-GAAP Financial Measures Reconciliation of Comprehensive Income to Adjusted EBITDA Three Months Ended Years Ended March 31, December 31, (in millions) 2024 2023 2023 2022 Net income and comprehensive income 80.4 155.7 417.3 439.4 Additions: Depreciation and amortizatio

Churchill Downs — Investor Presentation (June 2024) on 6ix