Kentucky Derby Betting Sets Record, EBITDA Slightly Off 2024 Pace

Despite unfavorable weather and what some analysts are calling a slight decrease in ticket sales due to US tariff fluctuations, Churchill Downs (NASDAQ: CHDN) declared another year of record betting on the Kentucky Derby. 

Total betting from all sources for Saturday's race reached $234.4 million, surpassing the previous record of $210.7 million established last year. The gaming company noted that the total betting for the Kentucky Derby Day program reached $349 million across all sources, setting a new record and surpassing the $320.5 million recorded in 2024. During Derby Week overall, total handle reached $473.9 million, surpassing the former record of $446.6 million established last year. The operator’s TwinSpires division broke new records as well.

"TwinSpires, the official betting partner of the Kentucky Derby, handled a new record of $108.0 million in wagering on Churchill Downs races for the Kentucky Derby Day program, compared to last year’s record of $92.1 million, including all settled future wagers and affiliate wagering. TwinSpires’ handle on the Kentucky Derby race was a new record of $73.0 million, beating last year’s record of $60.9 million, including all settled future wagers and affiliate wagering,” according to a statement.

Churchill Downs stated that adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the Derby will rank among the top two performances in the operator’s history, but will fall short of the record set last year by $2 million to $4 million. 

Derby Earnings Might Have Been Affected by Broader Economic Factors 

Churchill Downs' shares have declined by 16.60% in the last month, a timeframe that included the company's first-quarter earnings announcement, which triggered a significant sell-off. 

The update featured remarks from the firm halting capital expenditures at its namesake Kentucky track, due to tariff concerns. In February, the operator informed investors it might invest up to $920 million by 2028 to enhance the Conservatory, the infield, and the Skye, with around $400 million of those costs anticipated to occur this year. 

Those plans are currently paused due to uncertainty in the US economy, and it seems that this lack of clarity might have been a concern for some potential Derby attendees. 

“The primary reason for the decline in earnings is that ticket sales over the final 30 days up to the event were lower than expected,” noted Jefferies analyst David Katz in a note out Sunday. “The reasons for the missed expectations included the closer-in sales of some newer seating areas and likely poor weather on Derby weekend.”

Derby Remains a Long-Term Growth Engine for Churchill Downs 

There is plenty of speculation on how tariffs might impact the gaming sector, along with some indications that operators of physical gaming establishments are struggling due to the Trump Administration's attempts to impose tariffs on US trade partners. 

Year-to-date movements in gaming stocks, including Churchill Downs, indicate investor concern; however, the Derby continues to be a key element of the Churchill investment strategy, and it’s probable that the operator is not definitively scaling back on spending plans that may enhance growth. 

“Current management commentary is that the growth trajectory remains long and positive and capital investment should continue,” adds Katz. “Our thesis on the Derby has been that the continued investment in more seating and revenue-generating amenities should have a long tail, which we believe is still valid.