Churchill Downs, Incorporated · NASDAQ:CHDN

Churchill Downs — Investor Presentation (June 2022)

73 slides from Churchill Downs's investor presentation, June 2022

1. Slide 1: Investor Presentation

   Investor Presentation June 2022

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  Peninsula Pacific Entertainment Acquisition  Announced Project Capital Investments  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 Racetrack (“CDRT”) Machines (“HRMs”) TwinSpires Casino Gami

6. Slide 6: CDI Overview: P2E Acquisition

   Business Overview CDI Overview Peninsula Pacific Entertainment (“P2E”) Acquisition  Provides substantial scale and expands historical racing geographic diversification  Immediately accretive to earnings per share and free cash flow High quality assets  Colonial Downs Racetrack in New Kent,Virgini

7. Slide 7: Case for Investing

   Case for Investing Case for Investing Significant Capacity for The Kentucky Derby Diverse Organic Growth Growth  Iconic and irreplaceable asset  Expansion of HRM properties in  Strong free cash flow generation Kentucky,Virginia, New Hampshire with disciplined maintenance  Consistent high margin

8. Slide 8: 148th Kentucky Derby

   148* Kentucky Derby 8 CHURCHILL DOWNS

9. Slide 9: 2022 Derby Week

   148th Kentucky Derby 2022 Derby Week Derby celebrations returned leading up to the 148th Kentucky Derby  Thunder over Louisville returned to the Louisville waterfront with hundreds of thousands of spectators for the first time since 2019  Derby Week nightlife was back in full force, using proceeds

10. Slide 10: 2022 Derby Week

    148th Kentucky Derby 2022 Derby Week Delivered strong NBC television ratings and viewership for the 148th Kentucky Derby  19.0 million peak viewership was the largest Kentucky Derby peak audience since 2017  16.0 million average viewership was the 8th consecutive year the event has topped 15 milli

11. Slide 11: Peninsula Pacific Entertainment Acquisition

    Peninsula Pacific Entertainment Acquisition 11

12. Slide 12: Transaction Overview

    P2E Acquisition Transaction Overview Transaction  On February 18, 2022, we announced our agreement to acquire substantially all of Overview the assets of P2E for total consideration of $2.485 billion  Debt funding necessary for transaction was completed on April 13, 2022: – $800 million Sr. Secure

13. Slide 13: Virginia - Existing Properties to Be Acquired

    P2E Acquisition Virginia - Existing Properties to Be Acquired CDI will acquire: Property State HRMs1  Colonial Downs Racetrack in New Kent,Virginia Colonial Downs Racetrack VA - Live and Historical Racing Segment  Six successful and growing Rosie’s Gaming Emporium Colonial Downs / Rosie’s VA 600 h

14. Slide 14: Virginia Development Rights

    P2E Acquisition Virginia Development Rights Dumfries Project  CDI will acquire the rights to build a large gaming resort, the Dumfries Project, with up to Existing HRMs: 2,687 1,800 HRMs in Northern Virginia Future HRMs: – Scheduled to open in 2023 Dumfries Project 1,6501 Rosie’s Emporia Rosie’s Em

15. Slide 15: New York and Iowa Assets

    P2E Acquisition New York and Iowa Assets del Lago Resort & Casino Hard Rock Hotel and Casino Operations  Waterloo, New York  Sioux City, Iowa  Gaming floor1:  Gaming floor1: - 1,700 slots - 639 slots - 80 table games - 20 table games  205-room hotel  54-room hotel  Nine restaurants / bar area

16. Slide 16: P2E Acquisition Valuation

    P2E Acquisition P2E Acquisition Valuation Multiple Investment Existing Properties ($ billions)  Adjusted for: – Corporate Synergies 10.2x $2.485 – Run rate for recently expanded/opened locations Future Development  Dumfries Project $0.6 - $0.8  Rosie’s Emporia  Additional 513 HRMs at up to 4 add

17. Slide 17: Announced Project Capital Investments

    Announced Project Capital Investments 17

18. Slide 18: Summary of Announced Project Capital Investments

    Announced Project Capital Investments Summary of Announced Project Capital Investments Target $ Project Completion millions The May 2023 $90  Turn 1 Experience Kentucky Derby  Paddock / Under the Spires May 2024 $185 - $200  Derby City Gaming Expansion and Hotel Late 2022 / 2Q’23 $76  Derby City

19. Slide 19: Project Capital Investments at Churchill Downs Racetrack

    Announced Project Capital Investments Project Capital Investments at Churchill Downs Racetrack Multi-year Announced Capital Investments Turn I Project Paddock / Under the Spires  Infield seating Potential Major  Renovate additional reserved seating areas Future Projects  Hotel 19

20. Slide 20: Turn 1 Experience at Churchill Downs Racetrack

    Announced Project Capital Investments Turn 1 Experience at Churchill Downs Racetrack Creating a new Turn 1 experience for the 149th Kentucky Derby in May 2023  $90 million project providing additional permanent stadium seating and new track-level hospitality club replacing current temporary Oaks an

21. Slide 21: Paddock Project at Churchill Downs Racetrack

    Announced Project Capital Investments Paddock Project at Churchill Downs Racetrack Enhancing the Paddock experience for nearly every guest for the 150th Kentucky Derby in May 2024  $185 - $200 million with a payback period of < 8 years  3,600 new premium reserved seats and 3,250 new standing room

22. Slide 22: Derby City Gaming Expansion

    Announced Project Capital Investments Derby City Gaming Expansion Expanding the Derby City gaming floor and building a new hotel  $76 million investment that will add 135,000 square feet of new space to the facility  41,000 square-foot gaming floor expansion expected to be completed by late 2022 –

23. Slide 23: Derby City Gaming Downtown

    Announced Project Capital Investments Derby City Gaming Downtown Creating a Derby City Gaming annex in Downtown Louisville  $80 million, 43,000 square-foot entertainment venue  Annex of Churchill Downs Racetrack  Located in the heart of Downtown Louisville, diagonal from the Kentucky Internationa

24. Slide 24: Turfway Park HRM Facility

    Announced Project Capital Investments Turfway Park HRM Facility Building a new HRM entertainment venue  Located in Florence, Kentucky  Up to $148 million1 investment in a state-of-the-art HRM facility  Plan to open with ~8502 HRMs and ability to expand to 1,200 in the future  Amenities include s

25. Slide 25: Louisiana HRM Expansion

    Announced Project Capital Investments Louisiana HRM Expansion Covington Fair Grounds off-track wagering facilities (“OTBs”) are adding HRMs under legislation approved by Louisiana Governor on June 21, 2021 Fair Grounds expects to add: Fair Grounds Race Course LaPlace 1  ~170 HRMs in 5 OTBs by end o

26. Slide 26: Queen of Terre Haute Casino Resort

    Announced Project Capital Investments Queen of Terre Haute Casino Resort Building the new Queen of Terre Haute Casino Resort  Awarded Vigo County casino license in January 2022  Up to $260 million investment  50-acre parcel of land off I-70 at the State Road 46 exit on the far-east side of Terre

27. Slide 27: Illinois and Florida Land Sales

    Pending Land Sales Illinois and Florida Land Sales Combined $488 million in proceeds from pending land sales Florida  On November 22, 2021, we announced an agreement with Link Logistics to purchase 115.7 acres of our land near Calder Casino for $291 million  Closed the sale of the land on June 17,

28. Slide 28: Live and Historical Racing Segment

    Live and Historical Racing Segment 28

29. Slide 29: Overview

    Live and Historical Racing Segment Overview Live Racing Historical Racing Facilities Churchill Downs Derby City Gaming Key metrics Racetrack Derby City Gaming Downtown1 Home of the 20191 2021 1Q’22 $ in millions Kentucky Derby Revenue $292 $431 $87 v. ’19 +47% v. 1Q’19 +308% Turfway Park HRM2 Turfwa

30. Slide 30: 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 Historic Americana Sophisticated Luxury Contagious Excitement Living Traditions 30

31. Slide 31: The Kentucky Derby - By The Numbers

    The Kentucky Derby The Kentucky Derby - By The Numbers Broad ranging in-person appeal and significant broadcast interest creates long-term support for iconic entertainment event Appeals to all ages NBC’s Most Watched Program Since Super Bowl LVI Age Range of  19 million peak viewership - largest au

32. Slide 32: The Month Long Celebration Leading Up to the Kentucky Derby

    The Kentucky Derby The Month Long Celebration Leading Up to the Kentucky Derby Through various non-affiliated organizations, spring kicks off with a month of events celebrating the Kentucky Derby Thunder Over Kentucky Derby Louisville Festival Marathon The largest annual A Boston Marathon fireworks

33. Slide 33: The Lead Up to the Kentucky Derby

    The Kentucky Derby The Lead Up to the Kentucky Derby Unique Derby Week Experiences Derby Week Experiences at the Track: Saturday: Opening Night  Tours of the Paddock area The annual kickoff to Derby week  Backstretch Tour at Dawn at features night racing and Churchill Downs entertainment Derby Wee

34. Slide 34: The Kentucky Derby Growth Strategy

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

35. Slide 35: 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 Official partners include Woodford Reserve, Longines, Ford and BMW Majority of sponsorship revenue dollars

36. Slide 36: Leverage unique experiences and make strategic capital investments

    The Kentucky Derby Leverage unique experiences and make strategic capital investments Capital Enhance Investments Guest Enable Price to Enable Experience Differentiation Segmentation Conversion to all-inclusive 2021 experience for all reserved P P P seating Homestretch Club – 3,250 premium all-inclu

37. Slide 37: Three unique Roads to the Derby

    The Kentucky Derby Three unique Roads to the Derby for a horse to qualify in one of 20 coveted Derby starting positions United States Japan European Horses compete for a Horses compete for one Horses compete for one Derby starting position Derby starting position Derby starting position through 37 r

38. Slide 38: Historical Racing Machine Overview

    Historical Racing Machines Historical Racing Machine Overview 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

39. Slide 39: Historical Racing Machine Overview

    Historical Racing Machines Historical Racing Machine Overview In Kentucky, nine racing licenses are available to be awarded by the Kentucky Horse Racing Commission (“KHRC”) (8 have been awarded) and are each allowed to have a main facility and one “annex” facility within a 60 mile radius of the lice

40. Slide 40: Churchill Downs Racetrack and Derby City Gaming

    Historical Racing Machines Churchill Downs Racetrack and Derby City Gaming Derby City Gaming  Operates at Churchill Downs Racetrack’s ancillary training facility in Louisville, Kentucky Opened Sep. 2018 Mid-20231 – Décor pays homage to our deep history in horse racing Total investment ($ millions)

41. Slide 41: Oak Grove Racing, Gaming & Hotel

    Historical Racing Machines Oak Grove Racing, Gaming & Hotel Annex Located off of Hwy 24 on the KY / TN border  ~55 miles from Nashville, Tennessee (pop. ~670,000) Opened Sep. 2020  Across the street from Fort Campbell, the second Total investment1 largest military base in the U.S. (pop. ~200,000)

42. Slide 42: Turfway Park Racing & Gaming and Newport Racing & Gaming

    Historical Racing Machines Turfway Park Racing & Gaming and Newport Racing & Gaming Turfway Park Racing & Gaming Renovation  Up to $148 million1 investment in a state-of-the-art Opened July 2022 Oct. 2020 HRM facility Total investment  Grand opening planned for September 2022 Up to $2001 $372 ($ m

43. Slide 43: TwinSpires Segment

    TwinSpires Segment 43 CHURCHILL DOWNS

44. Slide 44: 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

45. Slide 45: 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 Strategic Advantages Key metrics Linkage to the Kentucky Derby $ in millions 20192 2021 1Q’22  Inexpensively acquire new custom

46. Slide 46: Horse Racing Industry Handle Growth

    TwinSpires Horse Racing Horse Racing Industry Handle Growth Industry handle1 grew significantly since 2019 and wagering has shifted online Other Horse Racing Wagering U.S. Online Wagering2 Annual Growth Quarterly Growth $ in billions $ in billions $12.2 $11.0 $10.9 $2.8 $2.8 $2.5 $2.5 $6.7 $6.7 61%

47. Slide 47: TwinSpires Handle Growth

    TwinSpires Horse Racing TwinSpires Handle Growth TwinSpires Horse Racing handle1 has also grown significantly since 2019 Annual Growth Quarterly Growth $1,977 $1,962 $ in millions $ in millions $443 $1,456 $1,390 $395 $1,283 $330 $304 2017 2018 2019 2020 2021 1Q'19 1Q'20 1Q'21 1Q'22 VPY: +8% +5% +36

48. Slide 48: TwinSpires Horse Racing Content

    TwinSpires Horse Racing TwinSpires Horse Racing Content TwinSpires Horse Racing offers betting on ~165,000 races at 360 racetracks 365 days a year Arkansas Road to San Felipe Derby the Derby Rebel Triple Crown Breeder’s Cup The Whitney Challenge Travers Stakes Sword Dancer Invitational Woodward Stak

49. Slide 49: TwinSpires Horse Racing Content

    TwinSpires Horse Racing TwinSpires Horse Racing Content TwinSpires typically offers wagering 24/7 on racetracks from 16 countries France Ireland United Kingdom USA East East USA West West Uruguay Mexico Canada UAE South Africa New Zealand S. Korea Japan Australia Hong Kong Saudi Arabia Singapore 3AM

50. Slide 50: TwinSpires Sports and Casino Strategy

    TwinSpires Sports and Casino TwinSpires Sports and Casino Strategy CDI will maintain its retail sportsbooks, exit B2C online sports betting and casino business, and monetize online market access rights Jurisdiction CDI Property Mississippi Harlow’s and Riverwalk Casinos1 Pennsylvania Presque Isle Do

51. Slide 51: Gaming Segment

    Gaming Segment 51 CHURCHILL DOWNS

52. Slide 52: Regional Gaming Properties

    Gaming Segment Regional Gaming Properties Diverse portfolio of gaming properties Strategic advantages Local approach Key metrics  Unique Brands and marketing strategies $ in millions  Menus and offerings reflect local tastes 20191 2021 1Q’22  Promotions catered to local customer base  Loyal play

53. Slide 53: Wholly-Owned Gaming Properties

    Gaming Properties Wholly-Owned Gaming Properties Seven wholly-owned regional gaming properties and one management contract Slots1 & Video Retail Property State Acres Poker / VLTs1 Tables1 Racetrack Hotel Sportsbook Calder Casino FL 1702 1,100 - - - - Fair Grounds Slots and VSI3 LA 145 1,600 - P - P

54. Slide 54: Equity Investment – Miami Valley Gaming (50% Ownership)

    Gaming Properties Equity Investment – Miami Valley Gaming (50% Ownership) Property  Located on 120 acres in Lebanon, OH (North of Cincinnati, south of Dayton)  ~1,950 video lottery terminals1 and four dining facilities  Joint venture (50/50) with Delaware North Expansion announced for two smaller

55. Slide 55: Equity Investment – Rivers Casino Des Plaines (61% Ownership)

    Gaming Properties Equity Investment – Rivers Casino Des Plaines (61% Ownership) Premier casino located on 21 acres in Des Plaines, Illinois (~17 miles from Chicago) CDI invested $407 million for 61% equity investment on March 5, 2019 in a joint venture with Rush Street Gaming, LLC Property  1,928 p

56. Slide 56: Capital Management

    Capital Management 56 CHURCHILL DOWNS

57. Slide 57: 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 net leverage - willing to go higher for a strategic investment Engage in open and active dialogue with rating agencies

58. Slide 58: Capital Projects

    Capital Management Capital Projects Projected Capital Investments Capital 2021 Actuals 2022 Forecast Maintenance $40 million $60-70 million Project $52 million $300 - 350 million  Oak Grove  Turfway Park  Queen of Terre Haute  Newport  Churchill Downs  DCG Downtown  Churchill Downs  Derby Ci

59. Slide 59: Our investments have provided strong returns

    Capital Management Our investments have provided strong returns creating long-term shareholder value Investment Payback Property Year ($ millions) Period Winner’s Circle Suites and Courtyard 2015 $4 < 5 years Turf Club / Stakes Room 2016 $18 < 5 years Ocean Downs Slot Floor Purchase 2017 $13 < 2 yea

60. Slide 60: M&A is a core discipline of our team

    Capital Management We have demonstrated M&A is a core discipline of our team Typical M&A Target Screen Regional casino assets with future growth potential Well positioned competitively – existing gaming and future gaming expansion Accretive to free cash flow and earnings per share with returns above

61. Slide 61: CDI has returned $1.5 billion of capital to shareholders

    Capital Management CDI has returned $1.5 billion of capital to shareholders over the last 7 years Dividends  2022 was the 11th consecutive increase in the dividend per share  $152 million paid to shareholders in dividends over the last 7 years Share Repurchases  Returned $1.3 billion to sharehold

62. Slide 62: Environmental, Social, and Governance

    Environmental, Social, and Governance 62

63. Slide 63: 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 provide oversight to the Committee and CDI leadership regarding CDI’s ESG strategy  Oversight of CDI’s respon

64. Slide 64: 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

65. Slide 65: 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

66. Slide 66: CDI Approach to Social

    ESG CDI Approach to Social CDI is investing in the communities in which we operate  CDI contributes over $2.2 million annually via grants and in-kind donations to over 750 organizations  Each year, CDI donates Derby Week tickets and experiences to nonprofit fundraising auctions, resulting in > $2.

67. Slide 67: CDI Approach to Governance

    ESG CDI Approach to Governance Strong Board of Directors – eight highly qualified members that play a vital role in the direction of CDI  7 of 8 directors are independent  2 of 8 independent directors are a woman or diverse  Fully independent Audit and Compensation committees  Board includes fin

68. Slide 68: Appendix

    Appendix 68 CHURCHILL DOWNS

69. Slide 69: 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 

70. Slide 70: 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

71. Slide 71: Board of Directors (continued)

    Appendix Board of Directors (continued) Doug Grissom  Director since 2017  Managing Director of Madison Dearborn Partners’ Business & Government Software and Services team  Previously with Bain Capital, McKinsey & Company and Goldman Sachs Daniel Harrington  Director since 1998  Chair of Compen

72. Slide 72: Definition of Non-GAAP Financial Measures

    Definition of Non-GAAP Financial Measures Churchill Downs Incorporated (the “Company”, “we”, “our”) uses non-GAAP measures as a key performance measure of the results of operations for purposes of evaluating performance internally. These measures facilitate comparison of operating performance betwee

73. Slide 73: Reconciliation of Comprehensive Income to Adjusted EBITDA

    Reconciliation from GAAP to Non-GAAP Financial Measures Reconciliation of Comprehensive Income to Adjusted EBITDA 73

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