On February 28, 2017, Churchill Downs, Inc. (CHDN) reported its operating results for the 2016 fiscal year, which commenced on January 1, 2016 and ended on December 31, 2016.

CHDN operates in six business segments:

  • Horse Racing, consisting of live racing at Churchill Downs, Arlington Park, and Fair Grounds Race Course.  Calder Race Course in Miami is owned by CHDN, but is managed by the Stronach Group.
  • Casinos, including five casinos, two hotels, a 50% stake in Miami Valley Gaming, and a 25% stake in Saratoga Holdings.  CHDN has gaming positions (slot machines, video poker, and table games) in seven states.
  • TwinSpires, the largest, legal mobile platform for online betting on horse racing in the United States and includes related businesses such as BRIS (handicapping information).
  • Big Fish Games, a global producer and distributor of social casino, casual, and mid-core free-to-play premium paid games for PC, MAC, and mobile devices.
  • Other Investments in such companies as United Tote.
  • Corporate.

In 2016, CHDN had aggregate net revenue of $1.3 billion compared to $1.21 billion in 2015.  Diluted earnings per share were $6.42 in 2016 versus $3.71 in 2015.

Net revenue for each of the six business segments were (in millions of dollars): Horse Racing, $268.1; Casinos, $332.8; TwinSpires, $221.9; Big Fish Gaming, $486.2; Other Investments, $20.8; and Corporate, $1.0.

Total EBITDA for CHDN in 2016 was $334.5 million.  The percentage shares of EBIDTA for the segments were:  Horse Racing, 23.8% ; Casinos, 37.6%; TwinSpires, 16.5%; Big Fish Gaming, 23.6% ; Other Investments, less than 1%; and Corporate, -2.4%.

When the horse racing and online betting segments are combined, they account for 38% of aggregate net revenue and 40% of total EBIDTA.

The five-year performance of CHDN common stock was far above average.  A $100 investment in CHDN stock on December 31, 2011 would have grown to $302.92 by the end of 2016.  By contrast, a $100 investment in the S & P 500 index would have been worth $191.18 and a $100 investment in the Russell 2000 index of small-capitalization stocks would have increased to $196.45.

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