Churchill Downs, Inc. (CHDN) at the end of February released its operating results for 2018 (SEC Form 10K). It reported net revenue of just over $1 billion for 2018 compared to nearly $883 million in 2017. Racing and racing-related online operations accounted for 29% of total net revenues with most of the remaining 71% coming from casinos. In 2018, CHDN had net income of $353 million versus $141 million in 2017. Diluted earnings per share were $4.39 in 2018 and $2.55 in 2017.

At the conclusion of 2018, CHDN had six wholly-owned racetracks: Arlington Park (IL), Calder Race Course (FL), Fair Grounds Race Course (LA), Presque Isle Downs and Casino (PA), Ocean Downs (MD), and Churchill Downs (KY). All of them conduct Thoroughbred racing except for Ocean Downs, which is a Standardbred track. Calder Race Course is leased to the Stronach Group and is known as Gulfstream Park West, although the associated casino retains the Calder name.

Online operations encompassed TwinSpires, United Tote, and Bloodstock Research and Information Services (BRIS). TwinSpires accepts bets via internet and phone, United Tote manufactures pari-mutuel betting machines, and BRIS provides handicapping information for bettors.

During 2018, CHDN pari-mutuel handle increased by 8.3%, largely due to betting on the Kentucky Derby and Kentucky Oaks, and would have been even better had there not been a large decrease in handle at Arlington Park near Chicago. CHDN launched 900 historical racing machines in 2018 at Derby City Gaming in Louisville, Kentucky. It also started BetAmerica Sportsbook at its two Mississippi casinos, for sports betting, and plans to expand to other states that have or will legalize betting on college and professional sports.

CHDN in 2018 owned eight gaming operations located in seven states (MS, FL, LA, ME, PA, MD, and OH). The facilities had some 9,500 gaming positions.

CHDN stock increased by 35.2% in 2018 in comparison with the S & P 500 that decreased by 6.59% or negative 4.75% if reinvested dividends are included. Institutions such as mutual funds and pension systems own around 88% of CHDN stock outstanding. The top ten institutions own 42% of the stock and the top 20 own 55%.

As of this writing, CHDN has acquired two additional casinos in 2019 (in IL and PA). CHDN has split its stock three for one and the share price is up in 2019 by about 5%.

(Disclosure: William L. Shanklin is currently a CHDN shareholder).

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