Churchill Downs Incorporated (CHDN): Business Model Canvas [10-2024 Updated]
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Churchill Downs Incorporated (CHDN) Bundle
Churchill Downs Incorporated (CHDN) is a leader in the gaming and entertainment industry, renowned for its iconic horse racing events, particularly the prestigious Kentucky Derby. This blog post delves into the Business Model Canvas of CHDN, uncovering the key components that drive its success. From strategic partnerships and innovative customer engagement to diverse revenue streams, discover how CHDN positions itself in a competitive landscape and delivers unparalleled value to its customers.
Churchill Downs Incorporated (CHDN) - Business Model: Key Partnerships
Collaborations with other racetracks
Churchill Downs Incorporated (CDI) maintains strategic collaborations with various racetracks to enhance its operational footprint and market reach. In 2024, CDI partnered with several regional tracks to facilitate simulcasting and joint marketing efforts, which collectively increased engagement and revenue streams. For instance, the collaboration with the New York Racing Association (NYRA) allows for shared resources and promotional activities, benefiting both parties in the competitive landscape of horse racing.
Partnerships with online betting platforms
The shift towards digital wagering has prompted CDI to establish crucial partnerships with online betting platforms. Notably, TwinSpires, a subsidiary of CDI, has expanded its market access agreements significantly. As of September 2024, TwinSpires reported a revenue increase of $44.9 million compared to the previous year, driven largely by a $9.6 million rise from Exacta and $1.3 million from online sports betting market access agreements. These partnerships are vital for CDI's strategy to capture a larger share of the online betting market.
Alliances with gaming regulators
CDI actively collaborates with gaming regulators to ensure compliance and promote responsible gaming initiatives. In 2024, CDI has reinforced its relationships with state gaming commissions to navigate the evolving regulatory landscape. This engagement not only fosters trust with regulatory bodies but also positions CDI favorably for future expansions. The company's revenues from gaming operations, which reached $787.9 million in the first nine months of 2024, highlight the importance of these alliances.
Relationships with content providers
Content partnerships are essential for CDI, particularly in enhancing the viewer experience for races and gaming. CDI has established relationships with various media companies to broadcast events and provide engaging content. For example, CDI's strategic content agreements have resulted in increased viewer engagement and betting activity, contributing to a significant rise in net revenue from Live and Historical Racing, which saw an increase of $142.2 million year-over-year.
| Partnership Type | Collaborating Entities | Impact on Revenue (2024) |
|---|---|---|
| Racetrack Collaborations | New York Racing Association (NYRA) | Increased simulcasting revenues |
| Online Betting Platforms | TwinSpires | $44.9 million revenue increase |
| Gaming Regulators | State Gaming Commissions | $787.9 million gaming revenue |
| Content Providers | Various Media Companies | Enhanced viewer engagement |
Churchill Downs Incorporated (CHDN) - Business Model: Key Activities
Organizing live horse racing events
Churchill Downs Incorporated (CHDN) organizes numerous live horse racing events, with a significant focus on the Kentucky Derby, which saw a record-breaking attendance and revenue in 2024. The revenue from the Live and Historical Racing segment reached $252.4 million for the three months ended September 30, 2024, compared to $225.5 million for the same period in 2023, marking an increase of $26.9 million.
The adjustments in earnings before interest, taxes, depreciation, and amortization (EBITDA) for this segment also reflected growth, increasing from $80.9 million to $93.0 million during the same period.
Operating online betting through TwinSpires
TwinSpires, CHDN's online betting platform, reported a revenue increase to $118.7 million in Q3 2024, up from $112.4 million in Q3 2023, which translates to a growth of $6.3 million. The adjusted EBITDA for TwinSpires surged to $42.5 million, a notable rise from $33.9 million in the previous year.
Factors contributing to this growth included a $9.6 million increase attributed to the Exacta wager and a $1.3 million rise from online sports betting market access agreements.
Managing gaming operations at casinos
CHDN operates several gaming facilities, with the Gaming segment generating $270.3 million in revenue for Q3 2024, a rise of $25.4 million from $244.9 million in the same quarter of 2023. The adjusted EBITDA for this segment was reported at $123.3 million, slightly up from $122.3 million year-over-year.
The opening of the Terre Haute Casino Resort in April 2024 contributed significantly to this revenue increase, generating an additional $32.5 million.
Marketing and promotional activities
Marketing and promotional activities are integral to CHDN's strategy, particularly around major events like the Kentucky Derby. For Q3 2024, marketing and advertising expenses were recorded at $9.3 million for the Live and Historical Racing segment, $1.4 million for TwinSpires, and $9.5 million for the Gaming segment.
Overall, the marketing efforts have played a crucial role in enhancing brand visibility and driving customer engagement across CHDN’s various platforms.
| Activity | Q3 Revenue (2024) | Q3 Revenue (2023) | Change ($) | Adjusted EBITDA (2024) | Adjusted EBITDA (2023) |
|---|---|---|---|---|---|
| Live and Historical Racing | $252.4 million | $225.5 million | $26.9 million | $93.0 million | $80.9 million |
| TwinSpires | $118.7 million | $112.4 million | $6.3 million | $42.5 million | $33.9 million |
| Gaming | $270.3 million | $244.9 million | $25.4 million | $123.3 million | $122.3 million |
| Total | $641.4 million | $582.8 million | $58.6 million | $258.8 million | $237.1 million |
Churchill Downs Incorporated (CHDN) - Business Model: Key Resources
Churchill Downs Racetrack
The Churchill Downs Racetrack is a significant asset for the company, hosting the prestigious Kentucky Derby. In 2024, the racetrack achieved a record-breaking Derby Week, contributing to a revenue increase of $54.5 million year-over-year, which included a $38.6 million increase specifically from Derby Week activities. The racetrack remains a cornerstone of Churchill Downs Incorporated's operations, drawing substantial attendance and generating significant pari-mutuel handle.
TwinSpires Platform Technology
The TwinSpires online betting platform is a crucial technological asset for Churchill Downs. In the third quarter of 2024, TwinSpires generated $118.7 million in revenue, marking an increase of $6.3 million from the previous year. This growth was driven by a $9.6 million increase from Exacta betting and additional revenue from online sports betting market access agreements. The platform's technology supports both horse racing and sports betting, enhancing customer engagement and expanding market reach.
Strong Brand Recognition (e.g., Kentucky Derby)
Churchill Downs benefits from strong brand recognition, particularly associated with the Kentucky Derby, which is one of the most famous horse races globally. The brand's prestige plays a crucial role in attracting high attendance and significant betting activity. The 150th Kentucky Derby contributed to a substantial reduction in deferred revenue, highlighting its impact on financial performance. This brand strength translates into customer loyalty and premium pricing for tickets and associated services.
Financial Capital for Expansion
As of September 30, 2024, Churchill Downs Incorporated reported total assets of $7.17 billion and total equity of $1.11 billion. The company has significant financial capital for expansion, with a planned capital expenditure of approximately $450 million to $550 million for 2024, aimed at various projects including the Starting Gate Pavilion and Courtyard at Churchill Downs Racetrack. The company’s financial strategy also includes maintaining liquidity; as of September 30, 2024, they had $902.4 million available under their revolving credit facility.
| Key Resource | Description | Financial Impact (2024) |
|---|---|---|
| Churchill Downs Racetrack | Host of the Kentucky Derby, significant attendance and handle | Revenue increase of $54.5 million, including $38.6 million from Derby Week |
| TwinSpires Platform | Online betting platform for horse racing and sports | Generated $118.7 million in revenue, up $6.3 million year-over-year |
| Brand Recognition | Prestigious brand associated with the Kentucky Derby | Significant impact on attendance and revenue; reduced deferred revenue post-Derby |
| Financial Capital | Total assets of $7.17 billion, equity of $1.11 billion | Planned capital expenditures of $450 million to $550 million in 2024 |
Churchill Downs Incorporated (CHDN) - Business Model: Value Propositions
Unique entertainment experiences at live events
Churchill Downs Incorporated (CHDN) offers unique entertainment experiences, particularly through its flagship event, the Kentucky Derby. In 2024, the Kentucky Derby achieved record attendance and revenue, contributing significantly to the Live and Historical Racing segment, which generated $252.4 million in revenue for the third quarter alone, up from $225.5 million in the same period in 2023. The excitement surrounding live races enhances customer engagement and loyalty, differentiating CHDN from competitors.
Comprehensive online betting options
The TwinSpires platform provides a comprehensive range of online betting options. In the third quarter of 2024, TwinSpires revenue increased to $118.7 million, up from $112.4 million in 2023. This growth was driven by a $9.6 million increase from Exacta and a $1.3 million increase from online sports betting agreements. The platform's user-friendly interface and diverse betting options cater to various customer preferences, enhancing user experience and retention.
High-quality gaming facilities
Churchill Downs operates high-quality gaming facilities, including the recently opened Terre Haute Casino Resort, which alone contributed $32.5 million to the Gaming segment's revenue increase of $25.4 million in the third quarter. Overall, the Gaming segment reported $270.3 million in revenue for the third quarter of 2024, compared to $244.9 million the previous year. These facilities are designed to provide a premium gaming experience, attracting both local and regional patrons.
Engaging customer loyalty programs
CHDN has implemented engaging customer loyalty programs that incentivize repeat business. For the nine months ended September 30, 2024, the company recorded promotional expenses related to loyalty programs of $41.7 million. These programs not only enhance customer satisfaction but also drive revenue growth by encouraging increased wagering and participation in events. The success of these initiatives is reflected in the overall revenue growth across all segments, which totaled $2,110.1 million in 2024, marking a $209.6 million increase from 2023.
| Value Proposition | 2024 Revenue (in millions) | 2023 Revenue (in millions) | Growth (in millions) |
|---|---|---|---|
| Live and Historical Racing | $252.4 | $225.5 | $26.9 |
| TwinSpires | $118.7 | $112.4 | $6.3 |
| Gaming | $270.3 | $244.9 | $25.4 |
| Total Revenue | $2,110.1 | $1,900.5 | $209.6 |
Churchill Downs Incorporated (CHDN) - Business Model: Customer Relationships
Personalized customer service at venues
Churchill Downs Incorporated focuses on providing high-quality personalized customer service at its venues, particularly at the Churchill Downs Racetrack. The company employs a significant number of staff to ensure that customer inquiries and needs are addressed promptly. For instance, during the 150th Kentucky Derby in 2024, the racetrack hosted a record attendance of approximately 170,000 guests, requiring extensive customer service support to enhance the guest experience.
Loyalty programs for frequent bettors
Churchill Downs has implemented loyalty programs designed to retain customers and encourage frequent betting. The TwinSpires loyalty program offers rewards based on betting activity, which includes bonuses, exclusive promotions, and access to special events. The program has shown significant growth, with approximately 1.2 million active members as of September 2024. The company reported that loyalty program participants accounted for about 60% of total betting volume on TwinSpires during the first nine months of 2024.
| Year | Active Members | Percentage of Total Betting Volume |
|---|---|---|
| 2022 | 800,000 | 50% |
| 2023 | 1,000,000 | 55% |
| 2024 | 1,200,000 | 60% |
Engaging social media presence
Churchill Downs has developed an engaging social media presence across various platforms to connect with customers and enhance brand loyalty. As of 2024, the company boasts over 500,000 followers on Twitter and 350,000 followers on Instagram. Social media campaigns during key events, such as the Kentucky Derby, have resulted in engagement rates exceeding 7%, significantly higher than the industry average of 1.5%.
Customer feedback mechanisms
To ensure continual improvement in customer relations, Churchill Downs actively solicits customer feedback through various channels. The company utilizes post-event surveys, online reviews, and direct customer interactions to gather insights. In the last fiscal year, the company received over 10,000 customer feedback responses, with an overall satisfaction rate of 85%. The feedback has led to actionable changes, such as enhanced seating arrangements and improved food service options at events.
Churchill Downs Incorporated (CHDN) - Business Model: Channels
Direct sales through racetrack venues
Churchill Downs Incorporated generates significant revenue through direct sales at its racetrack venues. The Live and Historical Racing segment reported net revenue of $252.4 million for the three months ended September 30, 2024, up from $225.5 million in the same period in 2023. For the nine months ended September 30, 2024, revenue from this segment reached $991.5 million, compared to $849.3 million in 2023.
Online platform via TwinSpires
TwinSpires, Churchill Downs' online betting platform, has seen growth in its revenue streams. For the three months ended September 30, 2024, TwinSpires generated $118.7 million in net revenue, a rise from $112.4 million in 2023. In the nine-month comparison, revenue increased to $392.7 million from $347.8 million. The growth is attributed to a $9.6 million increase from Exacta and a $1.3 million increase from online sports betting market access agreements.
Retail sports betting locations
Churchill Downs has expanded its retail sports betting locations, contributing to the overall growth in the TwinSpires segment. The retail sports betting business saw an increase of $1.3 million in net revenue for the three months ended September 30, 2024. With retail operations bolstered by new regulations and market access agreements, the segment is positioned for further growth in the competitive landscape.
Partnerships with third-party betting sites
Churchill Downs has established partnerships with various third-party betting sites to enhance its market reach. These collaborations have allowed TwinSpires to leverage additional traffic and betting volume. The revenue from these partnerships contributed to the overall increase of $6.3 million in TwinSpires' revenue for the third quarter of 2024.
| Channel | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) |
|---|---|---|---|---|
| Direct Sales (Live and Historical Racing) | $252.4 | $225.5 | $991.5 | $849.3 |
| TwinSpires | $118.7 | $112.4 | $392.7 | $347.8 |
| Retail Sports Betting | $1.3 | N/A | N/A | N/A |
| Partnerships with Third-Party Sites | $1.3 | N/A | N/A | N/A |
Churchill Downs Incorporated (CHDN) - Business Model: Customer Segments
Horse Racing Enthusiasts
Churchill Downs serves a dedicated base of horse racing enthusiasts. This segment is characterized by their passion for live races and events, particularly the Kentucky Derby, which generated an estimated $400 million in economic impact for the local community in 2024. The track's revenue from live and historical racing reached $252.4 million in Q3 2024, up from $225.5 million in Q3 2023, reflecting a growing interest in horse racing events.
Online Gamblers
Online gambling has become a significant revenue stream for Churchill Downs, particularly through its TwinSpires platform. In Q3 2024, TwinSpires generated $118.7 million in revenue, a 6.3% increase from $112.4 million in Q3 2023. The online sports betting market has expanded dramatically, contributing to a total of $392.7 million in revenue for the nine months ended September 30, 2024.
Casino Patrons
The casino patron segment has also seen substantial growth, particularly with the opening of the Terre Haute Casino Resort in April 2024. Gaming revenue increased by $270.3 million in Q3 2024, up from $244.9 million in Q3 2023. For the nine months ended September 30, 2024, gaming revenue totaled $783.1 million, marking a noticeable growth due to increased patronage and gaming options.
Event Attendees
Event attendees, including those participating in private events and corporate gatherings at Churchill Downs, contribute to the company's diversified revenue streams. Revenue from racing event-related services reached $5.0 million in Q3 2024, indicating the importance of this customer segment. The overall net revenue for event services was $187.1 million for the nine months ended September 30, 2024.
| Customer Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (%) |
|---|---|---|---|
| Horse Racing Enthusiasts | $252.4 | $225.5 | 11.5% |
| Online Gamblers | $118.7 | $112.4 | 6.3% |
| Casino Patrons | $270.3 | $244.9 | 10.3% |
| Event Attendees | $5.0 | N/A | N/A |
Overall, Churchill Downs Incorporated has effectively tapped into multiple customer segments, leveraging its historical significance in horse racing while expanding its digital and gaming operations, which are critical to its continued growth and revenue diversification.
Churchill Downs Incorporated (CHDN) - Business Model: Cost Structure
Operational costs of racetracks and casinos
The operational costs associated with Churchill Downs Incorporated's racetracks and casinos encompass various expenses. For the nine months ended September 30, 2024, the company reported the following operational costs:
| Cost Item | Amount (in millions) |
|---|---|
| Gaming taxes and purses | (251.8) |
| Maintenance, insurance, and utilities | (34.6) |
| Property and other taxes | (10.7) |
| Other operating expenses | (59.8) |
Marketing and advertising expenditures
Marketing and advertising expenditures are crucial for driving revenue in the competitive gaming and racing sectors. The marketing and advertising expenses for the nine-month period ending September 30, 2024, were as follows:
| Segment | Marketing & Advertising Expenses (in millions) |
|---|---|
| Live and Historical Racing | (31.1) |
| TwinSpires | (7.5) |
| Gaming | (26.5) |
Salaries and employee benefits
Salaries and employee benefits are significant components of the cost structure. The total salaries and employee benefits for the nine months ended September 30, 2024, are detailed below:
| Segment | Salaries & Benefits (in millions) |
|---|---|
| Live and Historical Racing | (94.4) |
| TwinSpires | (23.9) |
| Gaming | (121.0) |
Regulatory compliance costs
Regulatory compliance costs represent essential expenses for adhering to laws and regulations governing gaming and racing operations. These costs include various fees and compliance-related expenses. The total regulatory compliance costs for the nine months ended September 30, 2024, are aggregated within other operating expenses, which amounted to (59.8) million across all segments.
Churchill Downs Incorporated (CHDN) - Business Model: Revenue Streams
Ticket sales from live events
Churchill Downs generates significant revenue from ticket sales for live events, particularly the Kentucky Derby. In 2024, ticket sales for live and simulcast racing amounted to approximately $76.6 million for the nine months ended September 30, 2024, compared to $67.2 million for the same period in 2023.
Wagering fees from online betting
The TwinSpires segment, which encompasses online betting, reported revenues of $111.3 million for the three months ended September 30, 2024, an increase from $108.5 million in the same quarter of 2023. For the nine months ended September 30, 2024, TwinSpires generated $369.6 million compared to $340.7 million in 2023.
Gaming revenues from casinos
Churchill Downs' gaming operations include revenue from casinos, with total gaming revenues reaching $270.3 million for the three months ended September 30, 2024, up from $244.9 million in the same quarter of 2023. For the nine months ended September 30, 2024, gaming revenues totaled $783.1 million, compared to $740.2 million in 2023.
Sponsorship and advertising income
Churchill Downs also earns revenue through sponsorship and advertising. In the most recent quarter, the company reported a total revenue from external customers classified as 'Other,' which includes food and beverage services and sponsorships, amounting to $72.2 million for the three months ended September 30, 2024.
| Revenue Source | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) |
|---|---|---|---|---|
| Ticket Sales from Live Events | 76.6 | 67.2 | 76.6 | 67.2 |
| Wagering Fees from Online Betting (TwinSpires) | 111.3 | 108.5 | 369.6 | 340.7 |
| Gaming Revenues from Casinos | 270.3 | 244.9 | 783.1 | 740.2 |
| Sponsorship and Advertising Income | 72.2 | N/A | N/A | N/A |
Article updated on 8 Nov 2024
Resources:
- Churchill Downs Incorporated (CHDN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Churchill Downs Incorporated (CHDN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Churchill Downs Incorporated (CHDN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.