Racing, wagering and entertainment business Churchill Downs Incorporated (CDI) released today the financial results for the second quarter of 2022 posting increases in revenue and income.
Double Digit Revenue Growth
CDI registered in Q2 2022 net revenue of $582.5 million, up 13% as compared to $515.1 million in the second quarter of 2021. The company stated that the result is the highest registered in second quarter performance.
Across its operational segments, live and historical racing accounted for $260.9 million to post an increase of 48% to $175.9 million in Q2 2021.
Part of that increase was offset by the decreases in net revenue from CDI’s TwinSpires brand, Gaming and All Other, which came out at $136.8 million, $184.3 million, and S500,000 declining by 2.8%, 0.9% and 96%, respectively, on the previous comparable period.
Total operating expenses in the reported quarter marginally increased to $382.8 million from $379.7 million in Q2 2021 with the biggest increase coming from live and historical racing, 21%.
The increase in net revenue and the relatively unchanged operating expenses led to operating income increasing to $199.7 million, up 47% from $135.4 million in Q1 2021.
Net income was $339.3 million and more than tripled the Q2 2021 result of $108.3 million but was impacted by other items the largest of which was the $291 million sale of excess land near Calder Casino in Florida.
Other items included the $8.1 million after-tax asset impairment charge at Churchill Downs Racetrack that did not recur in 2022, $4.7 million after-tax decrease in expenses related to legal reserves and transaction costs at Rivers Des Plaines, and $0.3 million after-tax benefit increase related to CDI’s equity portion of the non-cash change in the fair value of Rivers Des Plaines’ interest rate swaps.
The increases were partially offset by the $2.8 million after-tax increase in expenses related to transactions, pre-opening and other expenses, and the $2.3 million after-tax increase in legal reserves.
CDI stated that when all items impacting its Q2 2022 net income are excluded, adjusted net income increased by $29.4 million.
New TwinSpires Strategy
During the company’s earnings call, its chief executive officer William Carstanjen outlined ambitious plans for the TwinSpires brand to become a leading distributor of horse racing content, either directly or via a B2B model.
“Given our expertise and extensive knowledge of pari-mutuel wagering on horse racing, we have the technical expertise, access to racing content and technology to seamlessly integrate pari-mutuel wagering into existing third-party online sports wagering platforms.”William Carstanjen, CEO, CDI
TwinSpires will also look to provide “user interface and ancillary services” as part of its new horse racing strategy that will also enable the brand to offer sports wagering sponsorships for its flagship Kentucky Derby and generate “incremental content fees” for CDI’s racetracks.
The new TwinSpires strategy comes shortly after the brand failed to establish itself in the sports betting and iGaming content space and the decision by CDI’s management that it would discontinue both online betting and gaming operations in 2022.