Churchill Downs Announces Kentucky Derby Wagers Break Records
Stocks of Churchill Downs (NASDAQ: CHDN) increased on Monday after the gaming company reported that wagering on the Kentucky Derby reached a new peak.
This trend was seen in both the Kentucky Derby Day program and the entire range of Derby Week events. Mystik Dan, an 18-1 longshot, won the 150th running of the first part of the Triple Crown.
Monetary betting on the Kentucky Derby Day program set an all-time record of $320.5 million, surpassing last year's record of $288.7 million. All-sources wagering for the Kentucky Derby race achieved a new high of $210.7 million, breaking the previous record of $188.7 million from 2023. And total wagering for Derby Week reached a new record of $446.6 million, exceeding the previous year's record of $412.0 million, according to a statement by Louisville-based Churchill Downs.
The Kentucky Derby happened to occur at a favorable time for Churchill Downs investors, as the company's stock had been rising since the beginning of May by 12.28%. This surge was partly due to a strong first-quarter earnings report released at the end of April.
TwinSpires Boosts Churchill Downs' Kentucky Derby Performance
Churchill Downs also outlined new milestones for the TwinSpires unit. Bets through TwinSpires for the Derby Day program hit a record $92.1 million, surpassing the $75.5 million from 2023. For the Derby itself, TwinSpires took in a record $60.9 million in wagers - a significant jump from the previous record of $48.9 million set in 2022. Additionally, the Derby had the best viewership on NBC in 35 years, bolstering TwinSpires' performance.
TwinSpires, which garnered takeover interest a few years ago, played a key role in Churchill Downs' profits. The company is expected to generate sales before interest, taxes, depreciation, and amortization (EBITDA) of $26 million to $28 million during Derby Week.
Churchill Downs CEO Bill Carstanjen mentioned this in a press release. Outside of the Kentucky Derby, the company's CEO cited increased interest in the 150th running, the debut of the $200M Paddock Project, and remaining ticket prices left to raise as factors behind these earnings.
"We see three keys to this: 1) excitement and hence potential pricing power around the 150th running, 2) the introduction of the transformational $200M Paddock Project, and 3) unrealized ticket yield following the introduction of the First Turn Experience last year," wrote Jeffrey Stantial, an analyst from Stifel, to his clients.
Other Prospects for Churchill Downs' Growth
Though the Kentucky Derby is one of the most popular sports events in the US, it's not the only area providing opportunities for Churchill Downs. Horses owned by international entities have participated in the Kentucky Derby, and not just in the form of betting. Japan, for instance, is a small yet growing part of the total Derby wagering.
The top five finishes by Japanese horses, Forever Young and T O Password, seem to be helping Churchill's Europe & Japan "Road to Derby" initiative. "We think two top five positions for Japanese starters will aid in cultivating international interest and help Churchill Downs tap into a large wagering total addressable market, attracting more wealthy international visitors," said Stifel analyst Stantial.
The analyst also referenced historical racing machine (HRM) venues in Kentucky and Virginia, as well as a newly opened casino in Terre Haute, Indiana, as potential drivers for the company's future growth.
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Source: www.casino.org
