Churchill Downs Annual Report 2022

FY2022 Annual Report · Churchill Downs

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Notice of Annual Meeting of Shareholders
2023 Proxy Statement
2022 Annual Report on Form 10-K

DEAR FELLOW SHAREHOLDERS,

Churchill Downs Incorporated had a tremendous year in 2022—generating record revenue and record Adjusted EBITDA.
Our portfolio of business delivered over $1.8 billion of net revenue and $764 million of Adjusted EBITDA. Excluding 2020,
we have generated record revenue and record Adjusted EBITDA from continuing operations every year since 2016.

In 2022, we accomplished many key strategic and operational objectives and positioned the Company for growth in 2023
and beyond:
Š We held a very successful Kentucky Derby setting records in virtually every material metric.
Š We completed the P2E transaction, the largest acquisition in our Company’s history.
Š We expanded our HRM business into three new states—Virginia, New Hampshire and Louisiana.
Š We opened Turfway Park, our new HRM entertainment venue in Northern Kentucky.
Š We completed two other strategic acquisitions, Ellis Park in Northwestern Kentucky and Chaser’s in New Hampshire.
Š We completed the sale of the excess land at Calder, and, we have several significant strategic organic investments

underway to accelerate our future growth.

Š We expanded our ESG efforts including the ongoing promotion of responsible gaming, initiatives to lessen energy and
water usage, decrease carbon emissions, and to responsibly manage waste, increased investments in our communities
and our teams, further diversified our board of directors, and increased engagement with our shareholders.

Looking forward, we are focused on the organic growth projects that will support our growth over the years to come.
Š We remain committed to growing our iconic asset—The Kentucky Derby. The First Turn Experience will open in time

for the 149th Derby in May 2023, and our Paddock Project will be ready for the 150th Derby in May 2024.

HRMs are our key strategic focus over the next five to ten years for the Company as we look to expand our footprint
through our expansion in existing and new geographies including:

–

Our ongoing expansion in Virginia with our significant investment in the Dumfries and Emporia HRM
entertainment venues as well as in Colonial Downs Racetrack and selective new HRM venues in the future.

The pending acquisition of Exacta Systems, LLC to realize additional synergies related to our Virginia assets.

Our Kentucky HRM investments in the gaming floor expansion and hotel at Derby City Gaming, our investment in
Derby City Gaming Downtown, as well as the Ellis Park and Owensboro HRM entertainment venues.

Our investment in the Terre Haute Casino Resort in Terre Haute, Indiana.

Our overarching objective is to pursue what we have demonstrated we are good at—growing the Kentucky Derby,
developing greenfield and organic opportunities as well as executing acquisitions. Our disciplined focus allows us to grow
our Company while maintaining one of the strongest balance sheets in the industry, all of which will enable us to create
long-term shareholder value in the years to come.

We have an experienced group of leaders and talented team members who have helped to deliver these results and are
building our business to create the best possible total shareholder returns for our investors. We appreciate all their
dedication and hard work!

We remain steadfast in our commitment to creating long-term shareholder value and appreciate all of your support.

R. Alex Rankin
Chairman of the Board

William C. Carstanjen
Chief Executive Officer

FINANCIAL HIGHLIGHTS

$ in millions, except per share data

Consolidated Financial Results

Net Revenue

Operating Income

Net Income from Continuing Operations

Diluted EPS from Continuing Operations

Adjusted EBITDA(1)

Consolidated Balance Sheet

Total Assets

Total Debt

Total Liabilities

Shareholders’ Equity

Cash Flow and Liquidity

Cash Flows from Operating Activities From Continuing Operations

Capital Maintenance Expenditures

Net Leverage Ratio(2)

Shareholder Data:

Dividends Declared per Common Share

Common Stock Share Repurchases

Year-End Closing Stock Prices

Equity Market Capitalization

Total Capitalization

Financial Highlights

Year Ended December 31,
2021

2022

2020

$ 1,054

$ 1,597

$ 1,810

284

249

322

439

$ 0.33

$ 6.35

$ 11.42

$ 286.5

$ 627.0

$ 763.6

$ 2,686

$ 2,982

$ 6,207

$ 1,622

$ 1,968

$ 4,606

$ 2,319

$ 2,675

$ 5,655

367

143

5.4x

307

460

2.7x

552

511

5.9x

$ 0.622

$ 0.667

$ 0.714

298

176

$194.79

$240.90

$211.43

$ 7,690

$ 9,174

$ 7,902

$ 9,312

$11,142

$12,508

TOTAL SHAREHOLDER RETURN(3)

1 Year

3 Year

56%

178%

5 Year

-12%

-13%

-18%

CHDN(4) S&P 500(5) S&P Midcap

400(5)

-20% -19%

Russell
2000(6)

Russell
1000(6)

25%

23%

24%

10%

57%

38%

22%

55%

CHDN(4) S&P 500(5) S&P Midcap

400(5)

Russell
2000(6)

Russell
1000(6)

CHDN(4) S&P 500(5) S&P Midcap

400(5)

Russell
2000(6)

Russell
1000(6)

(1) Please refer to “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the
Company’s Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 22, 2023 for a
discussion of Adjusted EBITDA, a non-GAAP financial measure, and a reconciliation to the most directly comparable
GAAP measure. See Appendix A of this Proxy Statement for a reconciliation of Adjusted EBITDA to net income, which is
the most directly comparable financial measure calculated in accordance with GAAP.

(2) Net leverage ratio is the ratio of total debt (less cash) to Adjusted EBITDA.

(3) Total Shareholder Return (“TSR”) assumes dividends are reinvested. One-year TSR is calculated from December 31,
2021 to December 31, 2022. Three-year TSR is calculated from December 31, 2019 to December 31, 2022. Five-year
TSR is calculated from December 31, 2017 to December 31, 2022.

(4) Churchill Downs Incorporated (NASDAQ: CHDN)

(5)

(6)

600 N. HURSTBOURNE PARKWAY, STE. 400
LOUISVILLE, KENTUCKY 40222

NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS

Date:
Tuesday, April 25, 2023

Time:
9:00 a.m. Eastern Time

Place:
Via a live audio-only webcast at
www.proxydocs.com/CHDN. There
is no physical location for the 2023
Annual Meeting.

Agenda:

II.

To elect the three (3) Class III Directors identified in this Proxy
Statement for a term of three (3) years (Proposal No. 1);

To ratify the appointment of PricewaterhouseCoopers LLP as the
Company’s independent registered public accounting firm for fiscal year
2023 (Proposal No. 2);

III. To conduct an advisory vote to approve executive compensation

(Proposal No. 3);

IV. To conduct an advisory vote on the frequency of holding future advisory

votes on executive compensation (Proposal No. 4); and

To transact such other business as may properly come before the
meeting or any adjournment thereof, including matters incident to its
conduct.

Record Date:

The close of business on March 1, 2023, has been fixed as the record date for determining the shareholders entitled to
notice of, and to vote at, the Annual Meeting. Only shareholders of record at that time will be entitled to notice of and to
vote at the Annual Meeting and at any adjournments thereof.

Voting:

To attend and vote during the Annual Meeting, visit www.proxydocs.com/CHDN.
All shareholders, including those who expect to attend the Annual Meeting
virtually, are urged to vote prior to the Annual Meeting by telephone or Internet or
by requesting and promptly signing and returning a proxy card, as more fully
described in the Notice of Internet Availability of Proxy Materials.

Vote by Telephone

Vote by Internet

Vote by Mail

March 16, 2023

By Order of the Board of Directors.

BRADLEY K. BLACKWELL
Executive Vice President and
General Counsel,
Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 25, 2023

The Company’s Proxy Statement for the 2023 Annual Meeting of Shareholders and the Annual Report to
Shareholders for the fiscal year ended December 31, 2022 are available at
http://www.churchilldownsincorporated.com/proxy

TABLE OF CONTENTS

Notice of Annual Meeting of Shareholders

Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annual Meeting of Shareholders to be held on April 25, 2023 . . .
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting Instructions and Information . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information about our Executive Officers . . . . . . . . . . . . . . . . . .

Election of Directors (Proposal No. 1) . . . . . . . . . . . . .

Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Continuing Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement Age Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Compensation for Fiscal Year Ended December 31, 2022 . .
Director Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . . .

1
1
2

5
8

10
11
13
13
14

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . 15

Shareholder Communications . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oversight of Company Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Meetings and Committees . . . . . . . . . . . . . . . . . . . . . . . .
Board Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Responsibilities of the Compensation Committee . . . . . . . . . . .
Compensation Committee Interlocks and Insider Participation . . .
Compensation Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . .
Nominating and Governance Committee . . . . . . . . . . . . . . . . . .

15
15
15
16
16
17
17
17
18
18
19
19
19

Proposal to Ratify the Appointment of
PricewaterhouseCoopers LLP as the Company’s
Independent Registered Public Accounting Firm
for 2023 (Proposal No. 2) . . . . . . . . . . . . . . . . . . . . . . . 21

Independent Public Accountants . . . . . . . . . . . . . . . . . 22

Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22
22
22
22

Churchill Downs Incorporated Audit Committee
Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Key 2022 Compensation Actions . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation Philosophy and Core Principles . . . . . .
2022 “Say-on-Pay” Advisory Vote on Executive Compensation . . .
Role of Management and Independent Advisors . . . . . . . . . . . .
Factors Used to Evaluate Pay Decisions . . . . . . . . . . . . . . . . . . . .
Non-Disclosure of Certain Metrics and Targets . . . . . . . . . . . . . .
Components of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . .
Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Annual Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . .
Long-Term Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . .
Anti-Hedging Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clawback Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Compensation and Other Benefits . . . . . . . . . . . . . . . .
Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . .

31
32
32
32
33
34
35
35
36
38
41
41
41
42
43

2022 Summary Compensation Table . . . . . . . . . . . . . . 44

All Other Compensation for Fiscal Year Ended
December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Grants of Plan-Based Awards for Fiscal Year
Ended December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . 46

Outstanding Equity Awards at Fiscal Year-End
for Fiscal Year Ended December 31, 2022 . . . . . . . . . . 47

Stock Vested for Fiscal Year Ended
December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Nonqualified Deferred Compensation for
Fiscal Year Ended December 31, 2022 . . . . . . . . . . . . . 49

Potential Payments Upon Termination or
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Non-Solicit Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Severance Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52
52

Pay Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Identification of Median Employee . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratio (2022)

53
53

Pay Versus Performance . . . . . . . . . . . . . . . . . . . . . . . 54

Advisory Vote to Approve Executive Compensation
(Proposal No. 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Equity Compensation Plan Information . . . . . . . . . . . 59

Advisory Vote on the Frequency of Holding Future
Advisory Votes on Executive Compensation
(Proposal No. 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Certain Relationships and Related Transactions . . . . 60

Delinquent Section 16(a) Reports . . . . . . . . . . . . . . . . 61

Compensation Discussion and Analysis . . . . . . . . . . . 27

Multiple Shareholders Sharing the Same Address . . . 62

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28
29

Proposals by Shareholders . . . . . . . . . . . . . . . . . . . . . . 63

Proxy Statement

600 N. HURSTBOURNE PARKWAY, STE. 400
LOUISVILLE, KENTUCKY 40222

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 25, 2023

The Board of Directors (the “Board of Directors” or “Board”) of Churchill Downs Incorporated (“Company” “or “CHDN”) is
soliciting proxies to be voted at the 2023 Annual Meeting of Shareholders to be held on Tuesday, April 25, 2023, at
9:00 a.m. Eastern Time (the “Annual Meeting”), and at any adjournment or postponement thereof. The Annual Meeting
will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. You will be able to attend
and participate in the Annual Meeting online by visiting www.proxydocs.com/CHDN. Certain officers and directors of the
Company and persons acting under their instruction may also solicit proxies on behalf of the Board of Directors by means of
telephone calls, personal interviews and mail at no additional expense to the Company. The Notice of Internet Availability
of Proxy Materials (the “Notice”) was first mailed on or about March 16, 2023.

Voting Rights

Only holders of record of the Company’s Common Stock, no par value (“Common Stock”), on March 1, 2023 (the “Record
Date”), are entitled to notice of and to vote at the Annual Meeting. On that date, 37,431,956 shares of Common Stock were
outstanding and entitled to vote. Each shareholder has one vote per share on all matters coming before the Annual
Meeting. The shareholders of the Company do not have cumulative voting rights in the election of directors. Abstentions or
“withhold” votes, as applicable, and broker non-votes are not counted in determining the number of votes required for the
election of a director or passage of any matter submitted to the shareholders. Abstentions or “withhold” votes and broker
non-votes are counted for purposes of determining whether a quorum exists. For more information regarding broker
non-votes, see “What is a broker non-vote?” below.

To ensure the presence of a quorum, please vote over the Internet, by telephone or by mail as instructed in these materials
as promptly as possible. If a shareholder executes and returns a proxy card, but does not specify otherwise, the shares
represented by the shareholder’s proxy will be voted: (i) for the election of each of the three director nominees listed
below under “Election of Directors”; (ii) for the ratification of the appointment of PricewaterhouseCoopers LLP as the
Company’s independent registered public accounting firm for fiscal year 2023; (iii) for the advisory approval of the
compensation of the Company’s named executive officers as disclosed in this Proxy Statement pursuant to the
compensation disclosure rules of the Securities and Exchange Commission (the “SEC”); (iv) for the advisory approval of once
every year as the preferred frequency for advisory votes on executive compensation; and (v) in the discretion of the person
or persons voting the proxies, on such other business as may properly come before the Annual Meeting or any
adjournments thereof.

2023 Proxy Statement

Proxy Statement

VOTING INSTRUCTIONS AND INFORMATION

When and where is our Annual Meeting?

We will hold our Annual Meeting on Tuesday, April 25, 2023 at 9:00 a.m. Eastern Time online at www.proxydocs.com/CHDN.

How are we distributing our proxy materials?

In accordance with the “notice and access” rules and regulations adopted by the SEC, instead of mailing a printed copy of
our proxy materials to each shareholder of record (the “full set delivery” option), we are furnishing proxy materials to our
shareholders over the Internet (the “notice only” option). A company may use either option, “notice only” or “full set
delivery,” for all of its shareholders or may use one method for some shareholders and the other method for others. We
believe the “notice only” process expedites shareholders’ receipt of proxy materials and reduces the costs and
environmental impact of our Annual Meeting. The Company will bear the entire cost of the solicitation.

On March 16, 2023, we began mailing a Notice to our shareholders containing instructions on how to access this Proxy
Statement and our 2022 Annual Report on Form 10-K and vote online, as well as instructions on how to receive paper
copies of these documents for shareholders who so select. This Proxy Statement and the 2022 Annual Report on Form 10-K
are also available at http://www.churchilldownsincorporated.com/proxy.

Who can vote and ask questions at the Annual Meeting?

You are entitled to vote or direct the voting of your shares of CHDN Common Stock if you were a shareholder of record or if
you held CHDN Common Stock in “street name” at the close of business on the Record Date (Wednesday, March 1, 2023).
On that date, 37,431,956 shares of CHDN Common Stock were outstanding. Each share of CHDN Common Stock held by you
on the Record Date is entitled to one vote.

To vote during the Annual Meeting, you must be properly logged into the meeting website, as explained below under
“What do I need to attend, and vote at, the Annual Meeting?” We will respond to questions submitted that are applicable
to our business and otherwise in compliance with the rules of conduct for the meeting.

How many votes must be present to hold the Annual Meeting?

We must have a “quorum” to conduct the Annual Meeting. A majority of the outstanding shares of Common Stock entitled
to vote, represented in person by virtual attendance or by proxy, shall constitute a quorum. Once a share is represented for
any purpose at the Annual Meeting, it will be deemed present for quorum purposes for the remainder of the Annual
Meeting and for any adjournment of the Annual Meeting, unless a new record date must be set for the adjourned meeting.

What do I need to attend, and vote at, the Annual Meeting?

In order to attend the Annual Meeting, you must register in advance at www.proxydocs.com/CHDN prior to the deadline of
April 23, 2023 at 5:00 p.m. (Eastern Time). Upon completing your registration, you will receive further instructions via
email, including your unique link that will allow you access to the Annual Meeting and to submit questions prior to the
Annual Meeting. Only CHDN shareholders of record as of the close of business on the Record Date will be permitted to
attend the Annual Meeting. If you hold shares in “street name,” you will also need a valid “legal proxy” in order to vote at
the Annual Meeting, which you can obtain by contacting your account representative at the broker, bank or similar
institution through which you hold your shares. This legal proxy must be submitted with your registration to be able to vote
your shares at the Annual Meeting.

What proposals will be voted on at the Annual Meeting?

The following proposals from the Company will be considered and voted on at the Annual Meeting:

To elect the three (3) Class III Directors identified in this Proxy Statement for a term of three (3) years (Proposal No. 1);

To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting
firm for fiscal year 2023 (Proposal No. 2);

2023 Proxy Statement

Proxy Statement

To conduct an advisory vote to approve the executive compensation of the Company’s named executive officers as
disclosed in this Proxy Statement (Proposal No. 3); and

To conduct an advisory vote on the frequency of holding future advisory votes on executive compensation
(Proposal No. 4).

You may also vote on any other business as may properly come before the Annual Meeting or any adjournment thereof,
including matters incident to the Annual Meeting’s conduct.

How does the Board of Directors recommend I vote?

CHDN’s Board of Directors unanimously recommends that you vote:

“FOR” each of the three (3) director nominees identified in this Proxy Statement under “Election of Directors” to the
Board of Directors.

“FOR” the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent
registered public accounting firm for fiscal year 2023.

“FOR” the proposal to approve, on a non-binding advisory basis, the executive compensation of the Company’s named
executive officers as disclosed in this Proxy Statement.

Every “ONE YEAR” as the frequency of the advisory vote to approve the executive compensation of the Company’s
named executive officers.

How do I vote?

You may cast your vote in one of four ways:

By Submitting a Proxy by Internet. Go to the following website: www.proxypush.com/CHDN. You may submit a proxy
by Internet 24 hours a day. To be valid, your proxy by Internet must be received by the time of the Annual Meeting.
When you access the website, follow the instructions to create an electronic voting instruction form.

By Submitting a Proxy by Telephone. To submit a proxy using the telephone, call 1-866-284-6863 any time on a touch-
tone telephone. There is NO CHARGE to you for the call in the United States or Canada. International calling charges
apply outside the United States and Canada. You may submit a proxy by telephone 24 hours a day, 7 days a week.
Follow the simple prompts and instructions provided by the recorded message. To be valid, your proxy must be
received by the time of the Annual Meeting.

By Submitting a Proxy by Mail. If you have requested and received a proxy card by mail, mark your proxy card, sign and date
it, and return it in the prepaid envelope that was provided or return it to: Proxy Tabulator for Churchill Downs Incorporated,
P.O. Box 8016, Cary, North Carolina 27512-9903. To be valid, your proxy must be received by April 24, 2023.

During the Annual Meeting. To vote during the live webcast of the Annual Meeting, you must first register at
www.proxydocs.com/CHDN. Upon completing your registration, you will receive further instructions via email,
including your unique link that will allow you access to the Annual Meeting and to submit questions prior to the Annual
Meeting. Please be sure to follow instructions found on your proxy card and/or voting authorization form and
subsequent instructions that will be delivered to you via email. Shareholders will be able to attend the Annual Meeting
platform with the webcast beginning at 8:45 a.m. (Eastern Time) on April 25, 2023 pursuant to the unique access
instructions they receive following their registration at www.proxydocs.com/CHDN.

How can I revoke my proxy or substitute a new proxy or change my vote?

You can revoke your proxy or substitute a new proxy by use of any of the following means:

For a Proxy Submitted by Internet or Telephone

Submitting in a timely manner a new proxy through the Internet or by telephone that is received prior to the time of
the Annual Meeting;

Requesting, executing and mailing a later-dated proxy card that is received by April 24, 2023; or

Voting during the virtual Annual Meeting.

2023 Proxy Statement

Proxy Statement

For a Proxy Submitted by Mail

Executing and mailing another proxy card bearing a later date that is received by April 24, 2023;

Giving written notice of revocation to CHDN’s Secretary at 600 N. Hurstbourne Parkway, Ste. 400, Louisville,
Kentucky 40222 that is received by CHDN by April 24, 2023; or

Voting during the virtual Annual Meeting.

What is a broker non-vote?

Brokers, banks or other nominees holding shares on behalf of a beneficial owner may vote those shares in their discretion
on certain “routine” matters even if they do not receive timely voting instructions from the beneficial owner. With respect
to “non-routine” matters, the broker, bank or other nominee is not permitted to vote shares for a beneficial owner without
timely received voting instructions. The only routine matter to be presented at the Annual Meeting is the proposal to ratify
the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal
year 2023. The remaining proposals to be presented at the Annual Meeting are considered non-routine.

A broker non-vote occurs when a broker, bank or other nominee does not vote on a non-routine matter because the
beneficial owner of such shares has not provided voting instructions with regard to such matter. If a broker, bank or other
nominee exercises its discretionary voting authority on the proposal to ratify the appointment of PricewaterhouseCoopers
LLP as the Company’s independent registered public accounting firm for fiscal year 2023, such shares will be considered
present at the Annual Meeting for quorum purposes and broker non-votes will occur as to each of the other proposals
presented at the Annual Meeting. Broker non-votes will have no impact on the voting results of the election of directors or
the other proposals to be presented at the Annual Meeting.

How will my shares be voted if I return a blank proxy card or a blank voting instruction card?

If you are a holder of record of shares of our common stock and you sign and return a proxy card without giving specific
voting instructions, your shares will be voted:

“FOR” each of the three (3) director nominees identified in this Proxy Statement under “Election of Directors” to the
Board of Directors.

“FOR” the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent
registered public accounting firm for fiscal year 2023.

“FOR” the proposal to approve, on a non-binding advisory basis, the executive compensation of the Company’s named
executive officers as disclosed in this Proxy Statement.

Every “ONE YEAR” as the frequency of the advisory vote to approve the executive compensation of the Company’s
named executive officers.

If you hold your shares in street name via a broker, bank or other nominee and return a signed but blank voting instruction
card (and do not otherwise provide the broker, bank or other nominee with voting instructions), your shares:

will be counted as present for purposes of establishing a quorum;

will be voted in accordance with the broker’s, bank’s or other nominee’s discretion on “routine” matters, which
includes only the proposal to ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent
registered public accounting firm for fiscal year 2023; and

will not be counted in connection with the election of directors, the proposal to approve, on a non-binding advisory
basis, the executive compensation of the Company’s named executive officers as disclosed in this Proxy Statement, the
proposal to approve, on a non-binding advisory basis, the frequency of future advisory votes on executive
compensation or any other non-routine matters that are properly presented at the Annual Meeting. For each of these
proposals, your shares will be treated as “broker non-votes.”

Our Board knows of no matter to be presented at the Annual Meeting other than the proposals described above. If any
other matters properly come before the Annual Meeting upon which a vote properly may be taken, shares represented by
all proxies received by us on the proxy card will be voted with respect thereto as permitted and in accordance with the
judgment of the proxy holders.

2023 Proxy Statement

Proxy Statement

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of the Record Date (except as otherwise indicated below) regarding the
beneficial ownership of the Common Stock by the only persons known by the Company to beneficially own more than five
percent (5%) of the Common Stock, each director and director nominee of the Company, each named executive officer (as
defined in “Executive Compensation—2022 Summary Compensation Table” herein), and the Company’s directors and
executive officers as a group. Except as otherwise indicated, the persons named in the table have sole voting and
investment power with respect to all of the shares of Common Stock shown as beneficially owned by them. The percentage
of beneficial ownership is calculated based on 37,431,956 shares of Common Stock outstanding as of the Record Date. We
are not aware of any pledge of our Common Stock or any other arrangements the operation of which may at a subsequent
date result in a change in control of our Company.

Amount and Nature Of
Beneficial Ownership

Percent of Class

4,549,563(1)

12.15

Name of Beneficial Owner

FMR LLC and affiliates
245 Summer Street.
Boston, MA 02210

The Vanguard Group, Inc. and affiliates

100 Vanguard Blvd.
Malvern, PA 19355

BlackRock, Inc. and affiliates

55 East 52nd Street
New York, NY 10055

CDI Holdings LLC

444 W. Lake Street, Suite 2000
Chicago, IL 60606

Ulysses L. Bridgeman, Jr.

Andréa Carter

Robert L. Fealy

Douglas C. Grissom

Daniel P. Harrington

Karole F. Lloyd

R. Alex Rankin

Paul C. Varga

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

3,310,700(2)

2,988,923(3)

2,120,000(4)

24,097(5)

58,555(6)

10,979(7)

631,585(8)

16,551(9)

45,956(10)

11,301(11)

683,413(12)

306,003(13)

63,251(14)

9,472(15)

4,491(16)

8.84

7.98

5.66

0.16

1.69

0.12

1.83

0.82

0.17

4.98

13 Directors and Executive Officers as a Group

1,865,654(17)

Less than 0.1%.

(1) Based on a Schedule 13G/A filed with the SEC on February 9, 2023, reporting the beneficial ownership of FMR LLC and its

subsidiaries specified therein (“FMR”) as of December 30, 2022. As reported in such filing, FMR has sole voting power over
4,515,964 shares, sole dispositive power over 4,549,563 shares, and no shared voting or dispositive power over any shares.

(2) Based on a Schedule 13G/A filed with the SEC on February 9, 2023, reporting the beneficial ownership of The Vanguard Group and
its subsidiaries specified therein (“Vanguard”) as of December 30, 2022. As reported in such filing, Vanguard has sole voting power
over no shares, sole dispositive power over 3,264,967 shares, shared voting power over 16,046 shares and shared dispositive power
over 45,733 shares.

2023 Proxy Statement

Proxy Statement

(3) Based on a Schedule 13G/A filed with the SEC on February 3, 2023, reporting the beneficial ownership of BlackRock, Inc. and its
subsidiaries specified therein (“BlackRock”) as of December 31, 2022. As reported in such filing, BlackRock has sole voting power
over 2,842,367 shares, sole dispositive power over 2,988,923 shares and no shared voting or dispositive power over any shares.

(4) Based on a Schedule 13D/A filed with the SEC on March 17, 2022, reporting the beneficial ownership of (i) The Duchossois Group,

Inc. (“TDG”), (ii) CDI Holdings LLC (“Holdings”), and (iii) Craig J. Duchossois, as of January 28, 2022. TDG, Holdings, and
Mr. Duchossois reported shared dispositive power over 2,000,000 shares. Mr. Duchossois reported sole voting and dispositive
power over 120,000 shares. For purposes of Rule 13d-3, Mr. Duchossois may be deemed to share beneficial ownership of the
Holdings shares. Mr. Duchossois has disclaimed beneficial ownership of the Holdings shares.

(5)

(6)

(7)

Includes 6,388 deferred stock units, which Mr. Bridgeman has elected to defer pursuant to the Company’s deferred compensation
plan. Also includes 17,709 restricted stock units awarded by the Company for his board service, over which Mr. Bridgeman has
neither voting nor dispositive power until immediately following his resignation or retirement from the Board.

Includes 35,324 deferred stock units, which Mr. Fealy has elected to defer pursuant to the Company’s deferred compensation plan.
Also includes 23,231 restricted stock units awarded by the Company for his board service, over which Mr. Fealy has neither voting
nor dispositive power until immediately following his resignation or retirement from the Board.

Includes 4,428 deferred stock units, which Mr. Grissom has elected to defer pursuant to the Company’s deferred compensation
plan. Also includes 6,551 restricted stock units awarded by the Company for his board service, over which Mr. Grissom has neither
voting nor dispositive power until immediately following his resignation or retirement from the Board.

(8) Mr. Harrington shares voting and investment power with respect to 572,676 shares held by TVI Corp. He specifically disclaims

beneficial ownership of these shares. Amount in chart includes 35,678 deferred stock units, which Mr. Harrington has elected to
defer pursuant to the Company’s deferred compensation plan. Also includes 23,231 restricted stock units awarded by the Company
for his board service, over which Mr. Harrington has neither voting nor dispositive power until immediately following his resignation
or retirement from the Board. Amount in chart does not include 97,602 shares held by the Veale Foundation. Mr. Harrington is a
member of the Board of Trustees of the Veale Foundation, but Mr. Harrington disclaims beneficial ownership of those shares.

(9)

Includes 6,551 restricted stock units awarded by the Company for her board service, over which Ms. Lloyd has neither voting nor
dispositive power until immediately following her resignation or retirement from the Board.

(10) Includes 23,231 restricted stock units awarded by the Company for his board service, over which Mr. Rankin has neither voting nor

dispositive power until immediately following his resignation or retirement from the Board.

(11) Includes 3,301 restricted stock units awarded by the Company for his board service, over which Mr. Varga has neither voting nor

dispositive power until immediately following his resignation or retirement from the Board.

(12) Excludes 30,067 restricted stock units deferred under the Company’s Deferral Plan. Excludes 256,531 restricted stock units and 2018

performance stock units, tied to Mr. Carstanjen’s continued service to the Company, awarded under the Company’s 2016 Omnibus
Stock Incentive Plan over which Mr. Carstanjen has neither voting nor dispositive power until October 30, 2023, at which time
75,971 units shall vest without restriction; December 31, 2023, at which time 14,643 units shall vest without restriction; October 30,
2024, at which time 75,971 units shall vest without restriction; December 31, 2024, at which time 9,438 units shall vest without
restriction; October 30, 2025, at which time 75,971 units shall vest without restriction; and December 31, 2025, at which time 4,537
units shall vest without restriction. Excludes 29,199 performance stock units awarded under the Company’s executive long term
incentive compensation plan over which Mr. Carstanjen has neither voting nor dispositive power until December 31, 2023, at which
time the performance period ends with regard to 14,496 performance stock units; and December 31, 2024, at which time the
performance period ends with regard to 14,703 performance stock units. Further excludes all performance stock units to be
awarded to Mr. Carstanjen under the Company’s executive long-term incentive compensation plan for the performance period of
January 1, 2023 through December 31, 2025.

(13) Excludes 155,277 restricted stock units and 2018 performance stock units, tied to Mr. Mudd’s continued service to the Company,
awarded under the Company’s 2016 Omnibus Stock Incentive Plan over which Mr. Mudd has neither voting nor dispositive power
until October 30, 2023, at which time 47,483 units shall vest without restriction; December 31, 2023, at which time 6,596 units shall
vest without restriction; October 30, 2024, at which time 47,483 units shall vest without restriction; December 31, 2024, at which
time 4,230 units shall vest without restriction; October 30, 2025, at which time 47,483 units shall vest without restrcition; and
December 31, 2025, at which time 2,002 units shall vest without restriction. Excludes 13,274 performance stock units awarded
under the Company’s executive long term incentive compensation plan over which Mr. Mudd has neither voting nor dispositive
power until December 31, 2023, at which time the performance period ends with regard to 6,590 performance stock units; and
December 31, 2024, at which time the performance period ends with regard to 6,684 performance stock units. Further excludes all
performance stock units to be awarded to Mr. Mudd under the Company’s executive long-term incentive compensation plan for the
performance period of January 1, 2023 through December 31, 2025.

2023 Proxy Statement

Proxy Statement

(14) Excludes 3,906 restricted stock units deferred under the Company’s Deferral Plan. Excludes 8,855 restricted stock units, tied to

Ms. Dall’s continued service to the Company, awarded under the Company’s 2016 Omnibus Stock Incentive Plan over which Ms. Dall
has neither voting nor dispositive power until December 31, 2023, at which time 4,285 units shall vest without restriction;
December 31, 2024, at which time 3,102 units shall vest without restriction; and December 31, 2025, at which time the remaining
1,468 units shall vest without restriction. Excludes 8,196 performance stock units awarded under the Company’s executive long
term incentive compensation plan over which Ms. Dall has neither voting nor dispositive power until December 31, 2023, at which
time the performance period ends with regard to 3,295 performance stock units; and December 31, 2024, at which time the
performance period ends with regard to 4,901 performance stock units. Further excludes all performance stock units to be awarded
to Ms. Dall under the Company’s executive long-term incentive compensation plan for the performance period of January 1, 2023
through December 31, 2025.

(15) Excludes 4,625 restricted stock units, tied to Mr. Blackwell’s continued service to the Company, awarded under the Company’s 2016
Omnibus Stock Incentive Plan over which Mr. Blackwell has neither voting nor dispositive power until December 31, 2023, at which
time 734 units shall vest without restriction; February 10, 2024, at which time 1,606 units shall vest without restriction; December 31,
2024, at which time 734 units shall vest without restriction; February 10, 2025, at which time 817 units shall vest without restriction;
and December 31, 2025, at which time 734 units shall vest without restriction. Excludes 2,451 performance stock units awarded under
the Company’s executive long term incentive compensation plan over which Mr. Blackwell has neither voting nor dispositive power
until December 31, 2024, at which time the performance period ends. Further excludes all performance stock units to be awarded to
Mr. Blackwell under the Company’s executive long-term incentive compensation plan for the performance period of January 1, 2023
through December 31, 2025.

(16) Excludes 4,004 restricted stock units, tied to Ms. Adams continued service to the Company, awarded under the Company’s 2016

Omnibus Stock Incentive Plan over which Ms. Adams has neither voting nor dispositive power until December 31, 2023, at which time
734 units shall vest without restriction; February 10, 2024, at which time 1,059 units shall vest without restriction; December 31, 2024,
at which time the remaining 734 units shall vest without restriction; February 10, 2025, at which time 743 units shall vest without
restriction; and December 31, 2025, at which time 734 units shall vest without restriction. Excludes 2,228 performance stock units
awarded under the Company’s executive long term incentive compensation plan over which Ms. Adams has neither voting nor
dispositive power until December 31, 2024, at which time the performance period ends. Further excludes all performance stock units
to be awarded to Ms. Adams under the Company’s executive long-term incentive compensation plan for the performance period of
January 1, 2023 through December 31, 2025.

(17) See table on page 8 and “Information about our Executive Officers”.

2023 Proxy Statement

Proxy Statement

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The Company’s executive officers, as listed below, are elected annually to their executive offices and serve at the pleasure
of the Board of Directors.

Name and Age

William C. Carstanjen(1)
Age: 55

William E. Mudd(2)
Age: 51

Marcia A. Dall(3)
Age: 59

Bradley K. Blackwell(4)
Age: 51

Position(s) With Company and Term of Office

Chief Executive Officer since August 2014; President and Chief Operating Officer from March 2011 to
August 2014; Chief Operating Officer from January 2009 to March 2011; Executive Vice President and
Chief Development Officer from June 2005 to January 2009; General Counsel from June 2005 to
December 2006

President and Chief Operating Officer since October 2015; President and Chief Financial Officer from
August 2014 to October 2015; Executive Vice President and Chief Financial Officer from October 2007
to August 2014

Executive Vice President and Chief Financial Officer since October 2015

Executive Vice President and General Counsel since February 2023; Senior Vice President and General
Counsel from March 2017 to February 2023; Vice President, Operations from February 2015 to March
2017; Vice President, Legal from April 2011 to February 2015; Vice President, Legal and Regulatory
Affairs for TwinSpires from January 2007 to April 2011; Corporate Counsel from April 2005 to
January 2007

Maureen Adams(5)
Age: 59

Executive Vice President, Gaming Operations since February 2023; Senior Vice President, Gaming
Operations from February 2022 to February 2023; Vice President of Gaming Operations from July 2019
to February 2022; President and General Manager of Calder Casino from August 2013 to July 2019

(1) Prior to joining the Company, Mr. Carstanjen was employed at General Electric Company (“GE”). From 2004 through June 2005, he
served as the Managing Director and General Counsel of GE Commercial Finance, Energy Financial Services. From 2002 to 2004, he
served as General Counsel of GE Specialty Materials and, from 2000 to 2002, he served as Transactions and Finance Counsel of GE
Worldwide Headquarters. Mr. Carstanjen began his career as an attorney with Cravath, Swaine & Moore LLP in New York City,
specializing in mergers and acquisitions and other corporate transactions.

(2) Prior to joining the Company, Mr. Mudd was employed at GE. From 2006 through October 2007, he served as Chief Financial Officer,
Global Commercial & Americas P&L of GE Infrastructure, Water & Process Technologies. From 2004 to 2006, he served as Chief
Financial Officer, Supply Chain, Information Technology and Technology Finance, GE Consumer & Industrial Europe, Middle East, &
Africa, Budapest and Hungary and, from 2002 to 2004, he served as Manager, Global Financial Planning & Analysis and Business
Development at GE FANUC in Charlottesville, Virginia.

(3) Prior to joining the Company, Ms. Dall was employed at Erie Indemnity Company, a company providing sales, underwriting and

administrative services to Erie Insurance Exchange, where from March 2009 through October 2015, she served as Executive Vice
President and Chief Financial Officer. From January 2008 until March 2009, she served as Chief Financial Officer of the Healthcare
division at CIGNA Corporation. Prior to CIGNA, Ms. Dall was a corporate officer and the Chief Financial Officer for the International
and U.S. Mortgage Insurance segments of Genworth Financial, a former subsidiary of GE. Ms. Dall began her career in 1985 in the
Financial Management Program at GE and held various leadership roles both in finance and operations over her twenty-plus year
tenure with GE. Ms. Dall is a Certified Public Accountant.

(4) Prior to joining the Company, Mr. Blackwell served as Assistant General Counsel and Secretary at Michaels Stores, Inc. (“Michaels”),

a NYSE publicly traded specialty retailer with over 1,000 stores across 49 states, Canada, and Puerto Rico. Prior to Michaels,
Mr. Blackwell served as an attorney with Jones Day in Dallas, Texas, focusing on mergers and acquisitions and corporate counseling.

(5) Prior to joining the Company, Ms. Adams was employed by Caesars Entertainment for 15 years where she held a variety of senior

positions in Finance, Marketing/Sales, and Operations.

2023 Proxy Statement

Election of Directors (Proposal No. 1)

ELECTION OF DIRECTORS (Proposal No. 1)

At the Annual Meeting, shareholders will vote to elect the three (3) persons identified below to serve in Class III of the
Board of Directors and to hold office for a term of three (3) years expiring at the 2026 annual meeting of shareholders and
thereafter until their respective successors shall be duly elected and qualified or until the earlier of their resignation, death
or removal.

The Amended and Restated Bylaws of the Company provide that the Board of Directors shall be composed of not fewer
than three (3) nor more than fifteen (15) members, the exact number to be established by the Board of Directors, and
further provide for the division of the Board of Directors into three (3) approximately equal classes, of which one (1) class is
elected annually to a three (3) year term. Currently the Board of Directors is comprised of nine (9) directors, with three
(3) directors in Class I, three (3) directors in Class II and three (3) directors in Class III.

The Nominating and Governance Committee has recommended, and the Board has approved, the nomination of the
three (3) persons named in the following table for election as directors in Class III. The nominees currently serve as
members of Class III and have agreed to serve if re-elected.

Directors are elected by a plurality of votes cast by the shares entitled to vote in the election at a meeting at which a
quorum is present. With each shareholder having one vote per share to cast for each director position, the nominees
receiving the greatest number of votes will be elected. The biographical information for our directors and director
nominees below includes information regarding certain of the experiences, qualifications, attributes and skills that led to
the determination that such individuals are qualified to serve on the Board of Directors.

The Board of Directors recommends a vote “FOR” the
election of the directors in Class III named below.

2023 Proxy Statement

Election of Directors (Proposal No. 1)

Election of Directors

The following table sets forth information relating to the Class III director nominees of the Company who are proposed
to the shareholders for election to serve as directors for a term of three (3) years, expiring at the 2026 annual meeting of
shareholders, and thereafter until their respective successors shall be duly elected and qualified or until the earlier of
their resignation, death or removal.

Robert L. Fealy

Class III—Nominated for Terms Expiring in 2026

Background, Skills and Experience
Mr. Fealy is Managing Director of Limerick Investments, LLC, an investment firm. He previously was co-founder
and President of Aluminate, Inc., a provider of data analytics solutions, which was sold in 2021. He retired effective
June 30, 2014 as President, Chief Operating Officer and Director of The Duchossois Group, Inc. Mr. Fealy was
originally nominated to serve as a director of the Company pursuant to the stockholder’s agreement between the
Company and Duchossois Industries, Inc. Prior to Mr. Fealy’s employment with The Duchossois Group, Inc., he was
a senior executive at Cummins Inc., serving in various roles including Vice President-Treasurer and Vice President-
Global Business Strategy. Mr. Fealy currently holds the following leadership positions with other entities: Board
Director and member of the Audit Committee and Nominating and Governance Committee, Panduit, Inc.; Board
Director and member of the Compensation Commission, Affinaquest, Inc.; Entrepreneur Partner, Advisor and
Former Chairman, Chicago Ventures; Board Director and Treasurer, Richard L. Duchossois Memorial Foundation;
Member, University of Cincinnati Lindner College of Business Executive Cabinet; Board Member and past
Chairman, Uniting Voices Chicago; Trustee, The Morton Arboretum; and, Partner, Social Venture Partners.

Key Qualifications and Experience
Mr. Fealy has years of finance, entrepreneurial, accounting, strategy, international, human capital, and
leadership experience acquired while serving in multiple senior leadership roles with oversight over a diverse
group of companies with operations in over 30 countries.

Age: 71
Director since 2000

Douglas C. Grissom

Background, Skills and Experience
Mr. Grissom is a Managing Director on Madison Dearborn Partners’ (“MDP”) Business & Government Software
and Services team. Prior to joining MDP, he was with Bain Capital in private equity, McKinsey & Company, and
Goldman Sachs. At MDP, Doug serves on the Board of Directors of Fleet Complete. In addition, he was formerly on
the Boards of Directors of @stake, Aderant, Asurion, BlueCat Networks, Cbeyond, Fieldglass, Great Lakes Dredge
and Dock, Intelsat, LGS Innovations, Lightspeed Systems, LinQuest Corporation, and Neoworld. Outside MDP, he is
a Board Member at Amherst College, Endeavor Louisville, Harvard Business School Fund Council, James Graham
Brown Foundation, Louisville Collegiate Schools, and MetroSquash.

Age: 55
Director since 2017

Key Qualifications and Experience
Mr. Grissom has extensive financial and board experience within a variety of industries. Mr. Grissom also has
extensive private equity, mergers and acquisitions, and finance experience through his years of experience as
an investment banker, consultant, and investor.

Daniel P. Harrington

Background, Skills and Experience
Mr. Harrington serves as the President and Chief Executive Officer of HTV Industries, Inc., a private holding
company with diversified business interests that include manufacturing, distribution, technology, and banking.
Mr. Harrington also serves as a Trustee of The Veale Foundation. Previously, Mr. Harrington has served as a
Director of First Guaranty Bank, First State Financial Corporation, and Portec Rail Products, Inc. (serving on its
Audit and Compensation Committees).

Key Qualifications and Experience
Mr. Harrington has extensive financial, accounting, and chief executive experience within a variety of
industries. He also has board, compensation, and audit experience, including serving for years as the Audit
Chair for the Company and qualifies as an Audit Committee Financial Expert.

Age: 67
Director since 1998

(1) Summaries above include directorships at any time within the last 5 years in companies with a class of securities registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), subject to the requirements of Section 15(d)
of the Exchange Act or companies registered under the Investment Company Act of 1940 and, in the case of certain directors, other
present or former directorships or positions considered significant by them.

The Board of Directors has no reason to believe that any of the nominees will be unavailable to serve as a director. If any
nominee should become unavailable before the Annual Meeting, the persons named in the proxy, or their substitutes,
reserve the right to vote for substitute nominees selected by the Board of Directors.

2023 Proxy Statement

Election of Directors (Proposal No. 1)

Continuing Directors

The following tables set forth information relating to the Class I and Class II directors of the Company who will continue to
serve as directors until the expiration of their respective terms of office and until their respective successors are duly
elected and qualified.

William C. Carstanjen

Class I—Terms Expiring in 2024

Age: 55
Director since 2015

Karole F. Lloyd

Age: 64
Director since 2018

Paul C. Varga

Background, Skills and Experience
Mr. Carstanjen was named the Company’s twelfth Chief Executive Officer in August 2014 and appointed to
the Board of Directors in July 2015. Mr. Carstanjen served as the Company’s President and Chief Operating
Officer (2011-2014), the Company’s Chief Operating Officer (2009-2011) and as Executive Vice President,
General Counsel and Chief Development Officer for the Company (2005-2009). Mr. Carstanjen joined the
Company in July 2005 after serving as an executive with General Electric Company. Mr. Carstanjen began his
career as an attorney with Cravath, Swaine & Moore LLP in New York City, specializing in mergers and
acquisitions, corporate finance, and corporate governance. Mr. Carstanjen brings a wealth of experience and
knowledge to his leadership role at the Company. Throughout his tenure, Mr. Carstanjen has led the
Company’s diversification strategy into its online business lines, historical horse racing operations and
regional casino gaming, as well as led the growth of the Kentucky Oaks and Kentucky Derby events.
Mr. Carstanjen is a Director of Glenview Trust Company and the American Gaming Association.

Key Qualifications and Experience
Mr. Carstanjen has many years of leadership, strategy, mergers and acquisition, corporate finance, corporate
governance and legal experience. He brings a wealth of experience and knowledge through his leadership
roles at the Company.

Background, Skills and Experience
Mrs. Lloyd was elected to the Board of Directors in 2018 and serves as Chair of the Audit Committee.
Mrs. Lloyd has served on the Board of Directors of Aflac Inc. since January 2017 and as a member of the
Executive Committee and the Finance and Investment Committee of the Aflac Inc. Board of Directors.
Mrs. Lloyd is the retired Vice Chair and Southeast Regional Managing Partner for Ernst & Young LLP (“EY”).
From 2009 through 2016, she served as a member of the US Executive Board, Americas Operating Executive,
and the Global Practice Group for EY. In her 37-year career at EY, Mrs. Lloyd served many of EY’s highest
profile clients through mergers, IPOs, acquisitions, divestitures, and across numerous industries including
banking, insurance, consumer products, transportation, real estate, manufacturing, and retail. Mrs. Lloyd is
active in the Atlanta community, working with the Metro Atlanta Chamber of Commerce and The Rotary Club
of Atlanta. She was previously the Chair of the Atlanta Symphony Orchestra Board of Directors. Mrs. Lloyd is
active in supporting many colleges and universities throughout the southeast, including serving on the
President’s Advisory Council and the Board of Visitors at the University of Alabama. Mrs. Lloyd received her
NACD cyber-risk oversight certification in 2022.

Key Qualifications and Experience
Ms. Lloyd has extensive accounting and advisory experience that includes financial reporting, regulatory
compliance, internal audit, and risk management to go along with her leadership skills. She also brings experience
from serving as a public company board member and qualifies as an Audit Committee Financial Expert.

Background, Skills and Experience
Mr. Varga was appointed to the Board of Directors on February 25, 2020. Mr. Varga served as the Chairman
and Chief Executive Officer of Brown-Forman Corporation, a public global spirits and wine company, from
August 2007 until his retirement in December 2018. He served as President and Chief Executive Officer of
Brown-Forman Beverages, a division of Brown-Forman Corporation, from 2003 to 2005, and as Global Chief
Marketing Officer for Brown-Forman Spirits from 2000 to 2003. Mr. Varga currently serves on the Board of
Directors of Macy’s, Inc. as Lead Independent Director and as a member of both the Compensation and
Management Development Committee and Finance Committee. He previously served on the Board of
Directors of Brown-Forman Corporation from 2003 until July 2019.

Age: 59
Director since 2020

Key Qualifications and Experience
In addition to Mr. Varga’s many years of leadership experience in the role of chief executive officer and as a
public company board member, he also has considerable expertise and experience in corporate finance,
strategy, building brand awareness, product development, marketing, distribution, and sales.

(1) Summaries above include directorships at any time within the last 5 years in companies with a class of securities registered pursuant

to Section 12 of the Exchange Act, subject to the requirements of Section 15(d) of the Exchange Act or companies registered under
the Investment Company Act of 1940 and, in the case of certain directors, other present or former directorships or positions
considered significant by them.

2023 Proxy Statement

Election of Directors (Proposal No. 1)

Ulysses L. Bridgeman, Jr.

Class II—Terms Expiring in 2025

Background, Skills and Experience
Mr. Bridgeman is the owner and chief executive officer of Heartland Coca-Cola Bottling Company, LLC
(“Heartland”), which owns and operates a Coca-Cola production and manufacturing facility in Lenexa, Kansas
and seventeen Coca-Cola distribution facilities across various Midwestern states, including Kansas, Missouri, and
Illinois. Prior to his February 2017 acquisition of Heartland, Mr. Bridgeman was the owner and chief executive
officer of various companies operating over 450 restaurants in 20 states, including 263 Wendy’s restaurants and
123 Chili’s restaurants. From 1975 to 1983, and from 1986 to 1987, Mr. Bridgeman played professional
basketball with the Milwaukee Bucks, and from 1983 to 1986, he played for the Los Angeles Clippers.
Mr. Bridgeman recently acquired Ebony magazine, and currently serves on the Boards of Directors of Meijer,
Inc., Central Bank & Trust Company, the Naismith Basketball Hall of Fame, Simmons College of Kentucky, and the
West End School. He is a former Director of the James Graham Brown Foundation and served as past chairman
of the Board of Trustees of the University of Louisville. Mr. Bridgeman’s current role as a CEO and extensive
leadership experience make him ideally qualified as a member of the Board.

Key Qualifications and Experience
Mr. Bridgeman has extensive entrepreneurial and leadership experience, including starting and growing his own
companies and serving as chief executive officer of multiple companies. Mr. Bridgeman also has years of sports,
consumer, sales, acquisition, and international experience.

Background, Skills and Experience
Mr. Rankin is the Chairman of the Board of Sterling G. Thompson Company, LLC, a private insurance agency
and broker, and the President of Upson Downs Farm, Inc., a thoroughbred breeding and racing operation. He
is also Vice Chairman and Director of Glenview Trust Company, a private Trust and Investment Management
Company, and a Steward of The Jockey Club. Mr. Rankin is a Trustee and former Chairman of the James
Graham Brown Foundation, a private, non-profit foundation that fosters the well-being, quality of life, and
image of Louisville and Kentucky by actively supporting and funding projects in the fields of civic affairs,
economic development, education, and health and general welfare, which since 1954 has awarded over
3,200 grants totaling over $620 million.

Key Qualifications and Experience
Mr. Rankin has expertise in finance and risk management. He also has years of experience in, and a deep
understanding of, the thoroughbred horseracing industry.

Background, Skills and Experience
Ms. Carter was appointed to the Board of Directors on December 15, 2022. She has amassed over 20 years of
professional experience in the field of human resources across multiple industries and major organizations,
and has served since 2017 as Senior Executive Vice President and Chief Human Resources Officer for Global
Payments, Inc. in Atlanta, a worldwide provider of payment technology and software solutions. Prior to
joining Global Payments, Inc., Ms. Carter was Chief Human Resources Officer for Habitat for Humanity and
has held various executive Human Resources roles at Ralph Lauren, Newell Rubbermaid, and The Home
Depot. She holds a bachelor’s degree in interdisciplinary studies from Tennessee State University and is a
graduate of the Executive Leadership Council Class of 2022. Ms. Carter has been recognized with a number of
distinctions and awards in recent years, which include: Atlanta Business Chronicle, “Women who Mean
Business,” Atlanta Magazine, “Women Making a Mark,” Savoy Magazine, “Power 300 Most Influential Black
Executives,” Women’s Inc., “Most Influential Women Execs in Corporate America,” and is a 2021 recipient of
the UNCF MASKED award (Mankind Assisting Students Kindle Educational Dreams).

Key Qualifications and Experience
Ms. Carter has extensive leadership and human resources experience across multiple public companies.

Age: 69
Director since 2012

R. Alex Rankin

Age: 67
Director since 2008

Andréa Carter

Age: 53
Director since 2022

(1) Summaries above include directorships at any time within the last 5 years in companies with a class of securities registered pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), subject to the requirements of Section 15(d)
of the Exchange Act or companies registered under the Investment Company Act of 1940 and, in the case of certain nominees, other
present or former directorships or positions considered significant by them.

2023 Proxy Statement

Election of Directors (Proposal No. 1)

Retirement Age Policy

The Company has a mandatory retirement age policy in the Corporate Governance Guidelines with regard to directors,
which provides that a person is not qualified to serve as a director unless he or she is less than seventy-two (72) years of
age on the date of election. No director nominees in Class III will have met the mandatory retirement age as of the date of
the Annual Meeting.

Director Compensation for Fiscal Year Ended December 31, 2022

During 2022, each non-employee director of the Board of Directors received the compensation set forth below (all fees
shown are annual fees, except for meeting fees) which, after considering market data and the input of the Compensation
Committee’s independent compensation consultant, did not change from the compensation levels set for 2021.

Board of Directors

Compensation Committee

Nominating and Governance Committee

Audit Committee

Retainer
Fee ($)(1)

Meeting
Fees ($)(2)

Stock
Awards ($)(3)

Chairman
Fee ($)

Non-Chairman
Fee ($)

75,000

2,000

155,000

150,000(4)

25,000

20,000

35,000

12,500

10,000

15,000

(1) Retainer fee is paid in arrears, in equal quarterly installments.

(2) Directors who do not reside in Louisville, Kentucky may also request reimbursement for travel expenses to and from

Board and committee meetings.

(3) Each non-employee director receives a grant of restricted stock units (“RSUs”), with an aggregate grant date fair value

of $155,000.

(4) Represents an additional fee for serving as non-employee Chairman of the Board of Directors.

In accordance with the fees described on the previous page, in 2022, we provided the following compensation to our
non-employee directors. Mr. Carstanjen, our Chief Executive Officer (“CEO”), is not separately compensated for his service
on our Board. Please see the 2022 Summary Compensation Table on page 44 for a summary of the compensation paid to
our CEO with respect to 2022.

Name

Ulysses L. Bridgeman, Jr.

Andréa Carter

Robert L. Fealy

Douglas C. Grissom

Daniel P. Harrington

Karole F. Lloyd

R. Alex Rankin

Paul C. Varga

Fees earned or
paid in cash ($)

Stock
Awards ($)(2)

Total ($)

128,000(1)

155,000

283,000

3,465

139,500

155,000

129,500(1)

155,000

151,000(1)

155,000

150,000

243,000

136,500

155,000

3,465

294,500

284,500

306,000

305,000

398,000

291,500

(1) The Churchill Downs Incorporated 2005 Deferred Compensation Plan allows directors to defer receipt of all or part of
their retainer and meeting fees in a deferred share account until after their service on the Board has ended. This
account allows the director, in effect, to invest all or part of his or her deferred cash compensation in Company
Common Stock. Funds in this account are credited as hypothetical shares of Common Stock based on the market price
of the stock at the time the compensation would otherwise have been earned. Hypothetical dividends are reinvested
in additional shares based on the market price of the stock on the date dividends are paid. All shares in the deferred
share accounts are hypothetical and are not issued or transferred until the director ends his or her service on the
Board. Upon the end of Board service, the shares are issued or transferred to the director. On December 15, 2022, the

2023 Proxy Statement

Election of Directors (Proposal No. 1)

plan was amended so that effective December 15, 2022, director fees that are payable after January 1, 2023 and
deferred may only be notionally invested in Company Common Stock and payout options are limited to either a single
lump sum payment or equal annual installments over a term not to exceed ten years. In 2022, Mr. Grissom and
Mr. Harrington deferred all of their 2022 directors’ fees into a deferred share account under the plan, while
Mr. Bridgeman deferred 50% of his 2022 directors’ fees into a deferred share account under the plan. As of
December 31, 2022, Mr. Bridgeman had 6,367 deferred shares, Mr. Fealy had 35,209 deferred shares, Mr. Grissom had
4,413 deferred shares, and Mr. Harrington had 35,561 deferred shares under the plan.

(2) On April 26, 2022, each then-serving non-employee director received a grant of RSUs, valued in the amount of

$155,000, calculated based upon the closing price of a share of Common Stock on the date of grant. The RSUs vest one
year from the date of grant, subject to the director’s continued service through the vesting date. At the time a director
ceases being a director of the Company, the Company will issue one share of Common Stock for each vested RSU held
by such director. As of December 31, 2022, Mr. Bridgeman had 17,651 RSUs, Ms. Carter had 0 RSUs, Mr. Fealy had
23,155 RSUs, Mr. Grissom had 6,530 RSUs, Mr. Harrington had 23,155 RSUs, Ms. Lloyd had 6,530 RSUs, Mr. Rankin had
23,155 RSUs, and Mr. Varga had 3,290 RSUs.

(3) Ms. Carter was appointed to the Board, effective December 15, 2022.

Director Stock Ownership Guidelines

As memorialized in the Corporate Governance Guidelines, the Board expects all directors to display confidence in the
Company by ownership and retention of a meaningful amount of the Company’s Common Stock. Pursuant to the
Company’s insider trading policy, all directors are subject to the Company’s anti-hedging policy, which prohibits hedging
and monetization transactions with respect to the Company’s Common Stock. Each director is expected to own shares with
a fair market value equal to five (5) times the director’s annual retainer. Each director appointed or elected to the Board
has five (5) years from the date of appointment or election to the Board to meet this requirement. Each director’s
continuing compliance with the ownership guidelines will be measured in the year he or she stands for re-election and will
be considered as one of the criteria for nomination by the Nominating and Governance Committee.

The chart below shows each current director’s compliance with the ownership guidelines calculated as of December 31,
2022, other than with respect to Mr. Carstanjen, who is subject to maintaining holdings of the Company’s Common Stock
equal to at least six (6) times his annual base salary, pursuant to the Key Executive Stock Ownership and Retention
Guidelines, as further described in the “Executive Stock Ownership Guidelines” section below. Furthermore, deferred
shares acquired by directors under the Churchill Downs Incorporated 2005 Deferred Compensation Plan and RSUs granted
as director compensation are included for purposes of measuring compliance with the Company’s share ownership
guidelines.

Director

Ulysses L. Bridgeman, Jr.

Andréa Carter

Robert L. Fealy

Douglas C. Grissom

Daniel P. Harrington

Karole F. Lloyd

R. Alex Rankin

Paul C. Varga

✓ = Met guidelines.

Ownership
Guidelines(1)

Met
Guidelines

✓

✓(2)

✓

(1) Guidelines adopted per the Company’s Board of Directors.

(2) Ms. Carter became a director in December 2022, and will not be required to satisfy the Director Stock Ownership

Guidelines until December 2027.

2023 Proxy Statement

Corporate Governance

CORPORATE GOVERNANCE

The Board of Directors is responsible for providing effective governance over the Company’s affairs. The Company’s
corporate governance practices are designed to align the interests of the Board and management with those of our
shareholders and to promote honesty and integrity throughout the Company.

During the past year, we continued to review our corporate governance policies and practices and compared them to those
suggested by various authorities in corporate governance and the practices of other public companies. We have also
reviewed guidance and interpretations provided by the SEC and Nasdaq.

Copies of the current charter, as approved by our Board, for each of our Audit, Compensation and Nominating and
Governance Committees and a copy of our Corporate Governance Guidelines, Code of Conduct (along with any
amendments or waivers related to the Code of Conduct) are available on our corporate website,
http://www.churchilldownsincorporated.com, under the “Governance” subheading under the “Investors” tab. Please note
that information available through our website is not incorporated by reference into this Proxy Statement.

Shareholder Communications

Shareholders and other interested parties may send communications to the Company’s Board of Directors addressed to the
Board of Directors or to any individual director c/o Churchill Downs Incorporated, 600 N. Hurstbourne Parkway, Ste. 400,
Louisville, Kentucky 40222. Any correspondence addressed to the Board of Directors in care of the Company is forwarded to
the Board of Directors without review by management.

Board Leadership Structure

R. Alex Rankin is the Chairman of the Board of Directors. The Board continues to deem it advisable to maintain certain
aspects of its governance structure to assure effective independent oversight. These governance practices include
maintaining executive sessions of the independent directors after each Board meeting, annual performance evaluations of
the CEO by the independent directors, and separate roles for the CEO and Chairman of the Board of Directors. Our
Corporate Governance Guidelines state that the offices of the Chairman of the Board and CEO may be either combined or
separated, in the Board’s discretion; provided, that if the Board designates one individual to serve as the Chairman of the
Board and the CEO, the Board will then designate an independent director to serve as the Lead Independent Director. The
Board will review the designation of Lead Independent Director periodically, but in no event less often than every two
years. The Board is currently led by an independent Chairman, Mr. Rankin. The Board believes that separating the roles of
CEO and Chairman of the Board is the most appropriate structure at this time. Separating the roles of CEO and Chairman of
the Board ensures that our CEO is able to more exclusively focus on this role. The Board also believes that an independent
Chairman of the Board allows for independent oversight of management, increases management accountability, and
encourages an objective evaluation of management’s performance relative to compensation.

The Chairman of the Board has the following responsibilities (in conjunction with the Lead Independent Director, if
applicable): (i) preside at all Board meetings and meetings of shareholders, (ii) serve as liaison between the Board and
Company management; (iii) work with the CEO to formulate the Company’s business strategies; and (iv) represent the
Company, Board and management to the shareholders and the public. Additionally, the Chairman of the Board serves as an
ex officio member of each Board committee on which the Chairman does not already serve as a voting member. The duties
of the Lead Independent Director, if applicable, are set forth in the Company’s Corporate Governance Guidelines.

Oversight of Company Risk

As part of its responsibility to oversee the management, business and strategy of the Company, the Board of Directors has overall
responsibility for risk oversight. While the Board of Directors performs certain risk oversight functions directly, such as its ongoing
review, approval and monitoring of the Company’s fundamental business and financial strategies and major corporate actions,
the majority of the Board of Directors’ risk oversight functions are carried out through the operation of its committees. Each
committee oversees risk management within its assigned areas of responsibility, as described below in the discussion of
committee responsibilities. Enterprise risk management falls under the leadership of our executive team with oversight from the
Audit Committee. The purpose of this program is to promote risk-intelligent decision making and, in turn, increase the likelihood
of achieving our operational objectives. Our Board of Directors is regularly advised of potential organizational risks and supporting
mitigating policies, including quarterly reports from management on cyber security matters. The Audit Committee is primarily

2023 Proxy Statement

Corporate Governance

responsible for overseeing the Company’s risk assessment and risk management practices, as well as its compliance programs.
The Audit Committee is also responsible for monitoring the effectiveness of the Company’s information technology security and
control, which includes insurance coverage for protection against cyber-attacks. The Compensation Committee’s responsibilities
include oversight of the risks associated with the Company’s compensation policies and practices, as well as its managerial
development and succession plans. The Nominating and Governance Committee oversees the risks related to the Company’s
corporate governance structure and processes, including risks related to environmental and sustainability matters.

Board Evaluations

The Board conducts an annual self-evaluation to assist in determining whether it and its committees are functioning
effectively. The Nominating and Governance Committee solicits comments from all directors and reports annually to the
Board with an assessment of the Board’s performance and how its committees are functioning. This is discussed with the
full Board following the end of each fiscal year. The assessment focuses on the Board’s contribution to the Company and
specifically focuses on areas in which the Board or management believes that the Board could improve.

Board Meetings and Committees

Nine (9) meetings of the Board of Directors were held during the last fiscal year. During the fiscal year, all incumbent
directors attended at least 75% of their Board and committee meetings for the period for which they served. The Company
encourages its directors to attend the annual meeting of shareholders each year. Each of the directors then serving on the
Board attended the Company’s annual meeting on April 26, 2022.

The Board has determined that all of the directors of the Company who served during any part of the last completed fiscal
year are “independent directors,” as defined under Nasdaq Rule 5605(a)(2), except William C. Carstanjen, due to his
position as CEO of the Company. In making such determination regarding Mr. Rankin, the Board considered that the
Company employed his son, Hunter Rankin, as Senior Director of Racing prior to Hunter Rankin’s departure from the
Company in August 2022. Hunter Rankin was not an executive officer of the Company. See “Certain Relationships and
Related Transactions” for additional details regarding Hunter Rankin’s employment with the Company.

As required by the Company’s Corporate Governance Guidelines, the Board of Directors currently has four (4) standing
committees: the Executive, Audit, Compensation, and Nominating and Governance Committees. The current composition
of the committees is illustrated in the table below, along with the number of meetings held in 2022.

Director Name

Ulysses L. Bridgeman

William C. Carstanjen

Board of
Directors

Executive
Committee

Audit
Committee

Compensation
Committee

Nominating and
Governance Committee

Member

Robert L. Fealy

Member

Chair

Douglas C. Grissom

Member

Daniel P. Harrington

Member

Chair

Karole F. Lloyd

R. Alex Rankin

Paul C. Varga

Andréa Carter

Member

Chair

Member

Chair

Member

Member(1)

Number of meetings in 2022

(1) Ms. Carter was appointed a member to the Compensation Committee by the Board as of February 21, 2023, in the normal course of

business.

= Ex-officio Member

2023 Proxy Statement

BOARD DIVERSITY

The table below provides certain diversity information regarding our Board members, with categories as set forth by
Nasdaq Listing Rule 5605(f).

Board Diversity Matrix (As of March 16, 2023)

Corporate Governance

Total Number of Directors: 9

Gender Identity

Directors

Demographic Background

African American or Black

White

EXECUTIVE COMMITTEE

Female

Male

The Executive Committee is authorized, subject to certain limitations set forth in the Company’s Amended and Restated
Bylaws, to exercise the authority of the Board of Directors between Board meetings. The Executive Committee does not
meet on a regular basis, but instead meets as and when needed.

AUDIT COMMITTEE

The primary purposes of the Audit Committee are to assist the Board of Directors in fulfilling its responsibility in monitoring
management’s conduct of the Company’s financial reporting process and overseeing the Company’s risk assessment and
risk management practices. The Audit Committee is generally responsible for monitoring the integrity of the financial
reporting process, systems of internal controls and financial statements and other financial reports provided by the
Company to any governmental or regulatory body, the public or other users thereof, as well as overseeing the processes by
which management assesses the Company’s exposure to cybersecurity and other risks and evaluating the guidelines and
policies governing the Company’s monitoring, control and minimization of such exposures.

The Audit Committee’s responsibilities are as follows, among others:

To monitor the performance of the Company’s internal audit function.

To appoint, compensate, retain and oversee the independent registered public accounting firm employed by the
Company for the purpose of preparing or issuing audit opinions on the Company’s financial statements and its internal
control over financial reporting.

To monitor the Company’s compliance with legal and regulatory requirements as well as the Company’s Code of
Conduct and compliance policies.

To consider the effectiveness of the company’s internal control system including information technology security and
control.

Review, at least annually, the adequacy and effectiveness of the Company’s IT general controls, and overall
assessment and plan to address IT specific risks, scope and funding related to cyber security, business continuity and
disaster recovery initiatives.

To inquire of management, including its internal auditor, and the Company’s independent auditors regarding
significant risks or exposures, including those related to fraudulent activities, facing the Company; to assess the steps
management has taken or proposes to take to minimize such risks to the Company; and to periodically review
compliance with such steps.

2023 Proxy Statement

Corporate Governance

In discharging its oversight role, to investigate any matter brought to its attention with full access to all books, records,
facilities and personnel of the Company and to retain outside counsel, auditors or other experts for this purpose.

To conduct an annual performance evaluation of the Audit Committee.

The Audit Committee of the Board of Directors operates under a written charter which is reviewed annually and the
Company’s Board of Directors has determined that all members of the Company’s Audit Committee are independent as
defined under Nasdaq Rule 5605(a)(2) and Rule 10A-3(b)(1) under the Exchange Act.

The Board of Directors has determined that Daniel P. Harrington and Karole F. Lloyd are “audit committee financial experts”
as defined by regulations promulgated by the SEC.

COMPENSATION COMMITTEE

Responsibilities of the Compensation Committee

The Board established the Compensation Committee to assist it in discharging the Board’s responsibilities relating to
compensation of the Company’s CEO, each of the Company’s other executive officers, and the Company’s non-employee
directors. The Compensation Committee has overall responsibility for decisions relating to all compensation plans, policies
and perquisites as they affect the CEO and other executive officers and may form and delegate authority to subcommittees
when it deems appropriate.

The Compensation Committee’s responsibilities are as follows, among others:

To oversee the development and implementation of the Company’s compensation policies and programs for executive
officers, including the Chairman of the Board and the CEO.

To establish the annual goals and objectives relevant to the compensation of the Chairman of the Board, the CEO and
the executive officers and to present such to the Board annually.

To evaluate the performance of the Chairman of the Board, the CEO and other executive officers in light of the agreed-
upon goals and objectives and to determine and approve the compensation level of the Chairman of the Board and the
CEO, including the balance of the components of total compensation, based on such evaluation and to present its
report to the Board annually.

To develop guidelines for the compensation and performance of the Company’s executive officers and to determine
and approve the compensation of the Company’s executive officers, including the balance of the components of total
compensation.

To establish appropriate performance targets, participation and levels of awards with respect to the Company’s
incentive compensation plans.

To administer the Company’s equity-based compensation plans, including the establishment of criteria for the granting
of stock-based awards and the review and approval of such grants in accordance with the criteria.

To establish and periodically review Company policies relating to senior management perquisites and other non-cash
benefits.

To review periodically the operation of the Company’s overall compensation program for key employees and evaluate
its effectiveness in promoting shareholder value and Company objectives.

To review the results of any advisory shareholder votes on executive compensation and consider whether to
recommend adjustments to the Company’s compensation policies and programs as a result of such results.

To consider, at least annually, whether risks arising from the Company’s compensation policies and practices for all
employees, including non-executive officers, are reasonably likely to have a material adverse effect on the Company,
including whether the Company’s incentive compensation arrangements encourage excessive or inappropriate risk-
taking.

To approve any compensation “clawback” policy required by law or otherwise adopted by the Company.

To oversee regulatory compliance with respect to matters relating to executive officer compensation.

2023 Proxy Statement

Corporate Governance

To approve plans for managerial development and succession within the Company and to present such plans to the
Board annually.

To review, assess and recommend to the Board appropriate compensation for outside directors.

To approve the report on executive compensation to be included in the Company’s proxy statement for the annual
meeting of shareholders.

To review and discuss with management the compensation discussion and analysis, and based on such discussion,
make a recommendation to the Board as to whether or not the compensation discussion and analysis should be
included in the proxy statement.

To review and reassess the adequacy of its charter annually and recommend any proposed changes to the Board for
approval.

To conduct an annual performance evaluation of the Compensation Committee.

The Compensation Committee of the Board of Directors operates under a written charter which is reviewed annually and is
comprised entirely of directors meeting the independence requirements of Nasdaq and Rule 10C-1(b)(1) under the
Exchange Act.

Compensation Committee Interlocks and Insider Participation

None of the directors who served on the Compensation Committee at any time during the last fiscal year were officers or
employees of the Company or were former officers of the Company. None of the members who served on the
Compensation Committee at any time during fiscal 2022 had any relationship with the Company requiring disclosure under
Item 404 of Regulation S-K. Finally, no executive officer of the Company serves, or in the past fiscal year has served, as a
director or member of the compensation committee (or other board committee performing equivalent functions) of any
entity that has one or more of its executive officers serving on the Board of Directors or the Compensation Committee.

Compensation Risk Assessment

The Compensation Committee performed an assessment of whether risks arising from the Company’s compensation
policies and practices for all employees during 2022, including non-executive officers, are reasonably likely to have a
material adverse effect on the Company. Each policy and plan was evaluated based on certain elements of risk, including,
but not limited to, (i) the mix of fixed and variable pay, (ii) types of performance metrics, (iii) performance goals and payout
curves, (iv) payment timing and adjustments, (v) equity incentives, and (vi) stock ownership requirements and trading
policies. Based on this evaluation, an assessment of each plan was created, along with an overall assessment of
compensation risk to the Company. After evaluation and discussion, the Committee determined that the Company’s
compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

NOMINATING AND GOVERNANCE COMMITTEE

The Company’s Nominating and Governance Committee is responsible for identifying, evaluating, and recommending
individuals qualified to become members of the Board, overseeing annual performance of the Board and Committees, and
establishing the criteria for and reviewing the effectiveness of the Company’s Board of Directors. In addition, the
Nominating and Governance Committee provides oversight regarding the Company’s environmental, sustainability and
governance efforts and progress and corporate governance policies.

The Company’s Nominating and Governance Committee operates under a written charter and is comprised entirely of
directors meeting the independence requirements of Nasdaq.

Pursuant to the Company’s Corporate Governance Guidelines and its Policy on Board Composition, the Nominating and
Governance Committee determines criteria regarding personal qualifications needed for Board membership and the
Committee considers, reviews qualifications, and recommends qualified candidates for Board membership. In doing so, the
Nominating and Governance Committee reviews the composition of the Board and the Company’s strategic plans to
determine its needs regarding Board composition and identify candidates with the appropriate skill sets and qualifications.
While the Company does not have a formal policy on diversity for members of the Board of Directors, the Company’s
Corporate Governance Guidelines and its Policy on Board Composition specifically provide that diversity of race and gender,

2023 Proxy Statement

Corporate Governance

as well as general diversity of backgrounds and experience represented on the Board of Directors are factors to consider in
evaluating potential directors. The Nominating and Governance Committee seeks to include diverse individuals with respect
to self-identified characteristics such as gender, race, and ethnicity when conducting a search for qualified candidates for
Board membership. The Nominating and Governance Committee sometimes employs an outside consultant to identify
nominees with the skill sets, experience and backgrounds that suit the Company’s needs. In 2022, the Company continued
its practice of conducting diversity, equity and inclusion (“DEI”) training for all employees, with targeted training for
managers. DEI training will continue on an annual basis. In December 2022, upon the recommendation of the Nominating
and Governance Committee, the Board appointed Ms. Carter as a director of the Company. Ms. Carter was first identified
as a candidate through a non-management director.

A candidate for the Company’s Board of Directors should possess the highest personal and professional ethics, integrity and
values and be committed to representing the long-term interests of the Company’s various constituencies. In considering a
candidate for nomination as a member of the Board, the Nominating and Governance Committee will consider criteria such
as independence; occupational background, including principal occupation (i.e., chief executive officer, attorney,
accountant, investment banker, or other pertinent occupation); level and type of business experience (i.e., financial,
lending, investment, media, racing industry, technology, etc.); self-identified diversity characteristics; number of boards on
which the individual serves; and the general diversity of backgrounds and experience represented on the Board. The
Nominating and Governance Committee periodically reviews the Company’s Corporate Governance Guidelines and its
Policy on Board Composition and, when appropriate, recommends changes to the Board. It also evaluates the performance
of the Board and provides feedback to the Board on how the directors, the committees and the Board are functioning.
Finally, it evaluates Board of Director practices at the Company and leadership on an annual basis and recommends
appropriate changes to the Board and/or its practices.

The Nominating and Governance Committee receives and considers issues raised by shareholders or other stakeholders in
the Company and recommends appropriate responses to the Board. The Nominating and Governance Committee will
consider recommendations for director candidates submitted by shareholders. Such questions, comments or
recommendations should be submitted in writing to the Nominating and Governance Committee in care of the Office of the
Secretary at 600 N. Hurstbourne Parkway, Ste. 400, Louisville, Kentucky 40222. The Nominating and Governance
Committee, in having adopted criteria to be considered for membership on its Board, considers such candidates applying
such criteria and follows the recommendation process noted above. Recommendations by shareholders that are made in
accordance with these procedures will receive the same consideration as recommendations from other sources.

2023 Proxy Statement

Proposal to Ratify the Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public
Accounting Firm for 2023 (Proposal No. 2)

PROPOSAL TO RATIFY THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2023 (Proposal No. 2)

The Board of Directors, on recommendation from the Audit Committee, selected PricewaterhouseCoopers LLP (“PwC”) to
serve as the Company’s independent registered public accounting firm for the year ending December 31, 2023. PwC has
served as the Company’s independent registered public accounting firm since the Company’s 1990 fiscal year.

Although the Company’s Amended and Restated Bylaws do not require that the Company’s shareholders ratify the
appointment of PwC as the Company’s independent registered public accounting firm, the Board of Directors is submitting
the appointment of PwC to the Company’s shareholders for ratification as a matter of good corporate governance. This
proposal will be approved if the votes cast favoring the action exceed the votes cast opposing the action. If the
appointment is not ratified, the Company’s Audit Committee will consider whether it is appropriate to select another
independent registered public accounting firm. Even if the appointment is ratified, the Company’s Audit Committee, in its
sole discretion, may select a different independent registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and its shareholders.

Representatives of PwC are expected to be present at the Annual Meeting and will be available to respond to appropriate
questions and will have the opportunity to make a statement if they desire to do so.

The Board of Directors and the Audit Committee recommend
that the shareholders vote “FOR” the ratification of the
appointment of PricewaterhouseCoopers LLP as the
Company’s Independent Registered Public Accounting Firm for
fiscal year 2023.

2023 Proxy Statement

Independent Public Accountants

INDEPENDENT PUBLIC ACCOUNTANTS

Audit Fees

The audit fees incurred by the Company for services provided by PwC (i) for the year ended December 31, 2022, were
$3,524,500 and (ii) for the year ended December 31, 2021, were $2,088,000. Audit fees include services related to the audit
of the Company’s consolidated financial statements, the audit of the effectiveness of internal control over financial
reporting, involvement with registration statement filings, statutory audits and consultations related to miscellaneous SEC
and financial reporting matters.

Audit-Related Fees

The Company incurred fees in the amount of $4,500 for 2022 and $4,000 for 2021 for assurance and related services
performed by PwC that were reasonably related to the performance of the audit or review of the Company’s financial
statements that are not reported in the preceding section.

Tax Fees

The Company did not incur any tax fees for services provided by PwC in 2022 or 2021. Tax fees include services related to
tax return preparation for a related entity, tax consultation and tax advice.

All Other Fees

All other fees incurred by the Company for services provided by PwC relate to the use of Inform, PwC’s accounting research
software, and PwC’s disclosure checklist software, which amounted to $4,500 in each of 2022 and 2021. The Audit
Committee has considered whether the provision of non-audit services to the Company is compatible with maintaining
PwC’s independence.

The Audit Committee has adopted a policy of evaluating and pre-approving all audit and non-audit services provided by the
independent auditors. The Audit Committee may delegate pre-approval authority to a member, provided that decisions of
such member shall be presented to the full Audit Committee at its next scheduled meeting. The Audit Committee
pre-approved all audit and permissible non-audit services provided by the independent auditors in 2022.

2023 Proxy Statement

Churchill Downs Incorporated Audit Committee Report

CHURCHILL DOWNS INCORPORATED AUDIT
COMMITTEE REPORT

The following is the report of the Company’s Audit Committee (the “Committee”), which consisted of five directors in 2022,
each of whom has been determined by the Board of Directors (the “Board”) to meet the current standards of the SEC and
the Nasdaq exchange to be considered an “independent director.” The Board has also determined that two members,
Daniel P. Harrington and Karole F. Lloyd, are “audit committee financial experts” as defined by the SEC.

The Committee has an Audit Committee Charter (the “Charter”), which was amended, restated and approved by the Board
on February 21, 2023. The Charter sets forth certain responsibilities of the Committee, which include oversight of the
integrity of the financial statements of the Company, the systems of internal controls over financial reporting which
management has established, the independence and performance of the Company’s internal and independent auditors, the
Company’s compliance with financial, accounting, legal and regulatory requirements, and the effectiveness of the
Enterprise Risk Management (“ERM”) function. The Committee reviews the work of the Company’s management, the
internal audit staff and the independent auditors on behalf of the Board.

Specifically, the Committee:

Š Met four (4) times during the year, during which the Committee reviewed and discussed with management and the

independent auditors the Company’s interim and annual financial statements for 2022; at each of such meetings, the
Committee met in executive session with the Company’s Vice President of Internal Audit, independent auditors,
General Counsel, CFO, and CEO.

Discussed with the independent auditors all matters required to be discussed by the applicable requirements of the
Public Company Accounting Oversight Board and the SEC.

Received the written disclosures and letters from the independent auditors required by applicable requirements of the
Public Company Accounting Oversight Board, regarding the independent auditors’ communications with the Audit
Committee concerning independence, and discussed with the independent auditors the independent auditors’
independence.

Based on the review and discussions referred to in the first three bullets above, the Committee recommended to the
Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2022.

Reviewed and discussed reports from the Company’s internal audit department and reports from the Company’s legal
department.

Discussed with management and the independent auditors the quality of the Company’s internal controls.

Reviewed and approved all related person transactions, if any.

Self-evaluated the effectiveness of the Committee.

Evaluated the effectiveness of the Company’s internal audit function.

Inquired of management, including its internal auditor, and the Company’s independent auditors regarding significant
risks or exposures, including those related to fraudulent activities, facing the Company; assessed the steps
management has taken or proposes to take to minimize such risks to the Company; and reviewed compliance with
such steps.

Reviewed and approved the 2022 audit and non-audit services and related fees provided by the independent auditors,
PricewaterhouseCoopers LLP (“PwC”). The non-audit services approved by the Audit Committee were also reviewed to
ensure compatibility with maintaining the auditor’s independence.

In February 2022, the Committee selected PwC to be reappointed as independent auditors for the calendar year 2022.

2023 Proxy Statement

Churchill Downs Incorporated Audit Committee Report

No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), through any general statement incorporating by reference in its entirety the Proxy Statement in which this
report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference.
In addition, this report shall not be deemed to be filed under either the Securities Act or the Exchange Act.

Members of the Audit Committee

Karole F. Lloyd, Chair
Ulysses L. Bridgeman, Jr.
Daniel P. Harrington
Paul C. Varga
R. Alex Rankin, ex officio

2023 Proxy Statement

Advisory Vote to Approve Executive Compensation (Proposal No. 3)

ADVISORY VOTE TO APPROVE EXECUTIVE
COMPENSATION (Proposal No. 3)

Pursuant to Section 14A of the Exchange Act, the Company’s shareholders are entitled to a vote to approve, on an advisory
and non-binding basis, the compensation of the Company’s named executive officers (“NEOs”) as disclosed in this Proxy
Statement in accordance with SEC rules. In accordance with the preference expressed by shareholders, the Company is
holding such advisory votes on an annual basis.

The Company has a “pay-for-performance” philosophy that forms the foundation of all decisions regarding compensation of
the Company’s NEOs. We believe that this compensation philosophy, and the program structure approved by the
Compensation Committee, is central to the Company’s ability to attract, motivate and retain individuals who can achieve
superior financial results while also aligning the interests of the executives with the interests of shareholders over the long-
term. This approach has resulted in the Company’s ability to attract and retain the executive talent necessary to guide the
Company successfully during a period of growth and transformation and react quickly to any potential threats to the
Company’s financial health. Please refer to “Compensation Discussion and Analysis—Executive Summary” for an overview
of the compensation of the Company’s NEOs.

This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs
and the policies and practices described in this Proxy Statement. At the Annual Meeting, shareholders will be asked to
approve the compensation of the Company’s NEOs by voting FOR the following resolution:

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named
executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC,
including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables
and disclosure in this Proxy Statement.”

This vote is advisory and therefore not binding on the Company. The Board of Directors and Compensation Committee
value the opinions of the Company’s shareholders. Should there be a significant vote against the NEO compensation as
disclosed in this Proxy Statement, the Board will consider those shareholders’ concerns and will evaluate whether any
actions are necessary to address those concerns.

This proposal will be approved if the votes cast favoring the action exceed the votes cast opposing the action.

The Board of Directors recommends a vote “FOR” the approval
of the advisory resolution relating to the compensation of the
Company’s Named Executive Officers as disclosed in this
Proxy Statement.

2023 Proxy Statement

Advisory Vote on the Frequency of Holding Future Advisory Votes on Executive Compensation (Proposal No. 4)

ADVISORY VOTE ON THE FREQUENCY OF
HOLDING FUTURE ADVISORY VOTES ON
EXECUTIVE COMPENSATION (Proposal No. 4)

Pursuant to Section 14A of the Exchange Act, the Company’s shareholders are entitled to vote, on an advisory and
non-binding basis, on how frequently they would like to cast an advisory vote on the compensation of the Company’s NEOs.
The Company is required to hold an advisory vote on NEO compensation at least once every three years. By voting on this
proposal, shareholders may indicate whether they would prefer an advisory vote on NEO compensation once every one,
two, or three years. Company shareholders may also, if they wish, abstain from voting on this proposal.

After careful consideration of the frequency alternatives, the Board believes that conducting advisory votes on NEO
compensation on an annual basis continues to be appropriate for the Company and its shareholders at this time.

The Company’s shareholders are not voting to approve or disapprove of the Board’s recommendation. Instead, the option
of every year, every two years or every three years that receives the highest number of votes cast by shareholders will be
considered by the Company as the shareholders’ recommendation as to the frequency of future advisory votes on
executive compensation.

The Board will carefully consider the outcome of the vote when making future decisions regarding the frequency of future
advisory votes on NEO compensation. However, because this vote is advisory and not binding, the Board and Compensation
Committee may decide that it is in the best interests of the Company and its shareholders to hold an advisory vote more or
less frequently than the alternative that has been selected by our shareholders.

The Board of Directors recommends a vote for every “ONE
YEAR” as the preferred frequency for advisory votes on
executive compensation.

2023 Proxy Statement

Compensation Discussion and Analysis

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (our “CD&A”) provides an overview of our executive compensation program for
2022 and our executive compensation philosophies and objectives.

Table of Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

2022 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Key 2022 Compensation Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Executive Compensation Philosophy and Core Principles . . . . . . . . . . . . . . . . . . . 32

2022 “Say-on-Pay” Advisory Vote on Executive Compensation . . . . . . . . . . . . . . 32

Role of Management and Independent Advisors . . . . . . . . . . . . . . . . . . . . . . . . . 32

Factors Used to Evaluate Pay Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Non-Disclosure of Certain Metrics and Targets . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Components of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Executive Annual Incentive Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Long-Term Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Executive Stock Ownership Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Anti-Hedging Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Clawback Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Deferred Compensation and Other Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Our NEOs were:

William C. Carstanjen
Chief Executive Officer

William E. Mudd
President and
Chief Operating Officer

Marcia A. Dall
Executive Vice President
and Chief Financial Officer

Bradley K. Blackwell(1)
Executive Vice President
and General Counsel

Maureen Adams(1)
Executive Vice President,
Gaming Operations

(1)

In July 2022, Mr. Blackwell and Ms. Adams were each appointed as an executive officer of the Company. In February
2023, Mr. Blackwell and Ms. Adams were promoted to Executive Vice President roles.

2023 Proxy Statement

Compensation Discussion and Analysis

Executive Summary

The Company has been creating extraordinary entertainment experiences for nearly 150 years, beginning with the
Company’s most iconic and enduring asset, the Kentucky Derby. Headquartered in Louisville, Kentucky, the Company has
expanded through the development of live and historical racing entertainment venues, the growth of the TwinSpires horse
racing online wagering business and the operation and development of regional casino gaming properties. Our long-term
success depends on our ability to attract, engage, motivate and retain highly talented executives and key employees to
achieve our strategic plans and deliver financial returns to shareholders over both the short-term and long-term. One of the
key objectives of our executive compensation program is to link executives’ pay to their performance and their
advancement of the Company’s long-term performance and business strategies. Other objectives include aligning the
executives’ interests with those of shareholders and encouraging high-performing executives to remain with the Company
over the course of their careers. We believe that the amount of compensation for each NEO reflects each individual’s
extensive management experience, high performance and exceptional service to the Company and our shareholders. We
also believe that the Company’s compensation strategies have been effective in attracting executive talent and promoting
performance and retention.

This CD&A describes the Company’s executive compensation policies and programs and how these policies and programs
apply to our NEOs. It also describes the actions and decisions of the Compensation Committee of the Board of Directors
(the “Compensation Committee” or “Committee”), which oversees the executive compensation program and determines
the compensation of the NEOs. A detailed discussion of the Committee’s structure, roles and responsibilities, and related
matters can be found under “Compensation Committee” on pages 18-20

Our long-term incentive goals are based on operational results that the Committee believes help drive Company and
shareholder success over multi-year performance periods. Certain metrics the Company uses for incentive purposes are as
follows (Please refer to “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” in
the Company’s Form 10-K for the fiscal year ended December 31, 2022 for reconciliation of these metrics to the most
directly comparable GAAP measures, and the discussion of the Company’s Executive Annual Incentive Plan (“EAIP”)
beginning on page 36 and the Company’s Executive Long-Term Incentive Plan (“ELTI”) beginning on page 38):

Adjusted EBITDA—Adjusted EBITDA used for compensation purposes under the EAIP in fiscal year 2022 was
$763.6 million, exceeding by approximately 8% the Adjusted EBITDA target of $709.3 million under the EAIP;

Cash Flow Metric—Cash Flow Metric for compensation purposes for the three-year performance for our 2020
performance stock units (“PSUs”) under the ELTI was $1,151.9 million, exceeding by approximately 59% the Cash Flow
target of $723.3 million under the ELTI; and

Total Shareholder Return—Total Shareholder Return from January 2, 2020 to December 30, 2022, the three-year
performance period for our 2020 PSUs under the Company’s ELTI, was 63%.

We believe the Company’s outstanding performance is further reflected in the key business metrics summarized in the
table below.

Fiscal
Year
2017

Fiscal
Year
2022

% Increase

5-Year Compound
Annual Growth
Rate (CAGR)

CHDN Stock Price

Net Income attributable to CHDN (millions)

$77.57

$211.43

$122.4

$ 439.4

Adjusted EBITDA (from continuing operations, millions)(1)

$286.2

$ 763.6

Earnings Per Share (from continuing operations, diluted)

$ 2.55

$ 11.42

Dividends Per Share

$0.507

$ 0.714

173%

259%

167%

348%

41%

22%

29%

22%

35%

(1) See Appendix A of this Proxy Statement for a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable

financial measure calculated in accordance with GAAP.

2023 Proxy Statement

Compensation Discussion and Analysis

2022 Highlights

In 2022, we delivered strong performance while continuing the execution of several organic investments and completing
the largest acquisition in our Company’s history that collectively we believe will provide long-term sustainable value
creation. We delivered strong growth in net revenue, operating income, net income, and Adjusted EBITDA compared to
fiscal year 2021:

Net revenue was $1.8 billion, up $212.6 million or 13%.

Net income attributable to Churchill Downs Incorporated was $439.4 million, up $190.3 million or 76%.

Adjusted EBITDA was $763.6 million, up $136.6 million, or 22%.

Cash from continuing operations was $510.8 million, up $51.3 million or 11%.

Live and Historical Racing Segment:

Adjusted EBITDA was $287.5 million, up $112.5 million or 64% from fiscal year 2021.

Churchill Downs Racetrack:

–

Derby Week successfully returned to full capacity at Churchill Downs Racetrack with the 148th Kentucky Derby
with over 147,000 fans gathered in person to watch the most exciting two minutes in sports on the first Saturday
in May.

– We successfully completed the Homestretch Club prior to the 148th Kentucky Derby and approximately

$8.0 million under budget.

– We continued construction on the new First Turn Experience which will be completed for the 149th Derby in May

2023 and the Paddock Project for the 150th Derby in May 2024.

– We extended the partnership with Woodford Reserve as the Presenting Sponsor for the Kentucky Derby through

2027.

Derby City Gaming delivered record net revenue and Adjusted EBITDA. We continued construction of the gaming floor
expansion and new five-story hotel.

Oak Grove delivered record net revenue and Adjusted EBITDA.

Š We celebrated the opening of the new historical racing machine (“HRM”) entertainment venue and racetrack facility at

Turfway Park in September 2022.

Š We began construction of Derby City Gaming Downtown in the city of Louisville, Kentucky as a new HRM

entertainment venue.

Š We completed the acquisition of Chasers in Salem, New Hampshire on September 6, 2022, which will enable the

Company to expand its HRM strategy with table games to the New England market.

Š We completed the acquisition of Ellis Park in Henderson, Kentucky in September 2022 including the rights to build an

HRM entertainment venue in Owensboro, Kentucky.

TwinSpires Segment:

Adjusted EBITDA was $114.1 million, up $31.4 million or 38% from fiscal year 2021.

Š We announced a multi-year agreement with FanDuel to enable FanDuel to create a fully integrated and seamless
wagering experience with a single wallet for their customers who want to bet on sports and on horse racing with
FanDuel TV driving ongoing engagement beginning in January 2023.

Š We announced a multi-year agreement with DraftKings to provide advanced deposit wagering (“ADW”) technology

and other services.

Š We announced the exit of the Online Sports & Casino business in February 2022 and ceased online wagering in

Tennessee, Colorado, Indiana, New Jersey, and Michigan.

Š We have executed strategic market access agreements with Bet365 in Pennsylvania and with Golden Nugget in Indiana

to monetize our online wagering skins.

2023 Proxy Statement

Compensation Discussion and Analysis

Gaming Segment

The Gaming Segment delivered a record $421.9 million of Adjusted EBITDA, an increase of $10.0 million or 2% from
fiscal year 2021.

Š We generated wholly owned same-store casino margins of 34.5% in 2022, down 2.0 basis points from 2021 and 5.8

basis points higher than 2019.

Rivers Des Plaines completed their $90 million gaming floor expansion in April 2022 which added 725 gaming positions,
a 24-table poker room and additional amenities.

Š We began construction of a $290 million casino, hotel, and entertainment venue in Terre Haute, Indiana.

Š We completed the sale of 115.7 acres of land near Calder Casino for $291.0 million or approximately $2.5 million per
acre to Link Logistics Real Estate on June 17, 2022. We also executed a §1031 transaction to defer approximately
$76.0 million of taxes related to the sale of the land.

Environmental, Social, and Governance

Š We expanded our ESG efforts including the ongoing promotion of responsible gaming; initiatives at our properties to

lessen energy and water usage, to decrease carbon emissions, and to responsibly manage waste; increasing
investments in the communities in which we operate and supporting our teams through educational and leadership
development; and further diversification of our Board and increasing engagement with our shareholders.

Š We continued our diversity, equity, and inclusion initiatives (DE&I) including the roll-out of our mission, vision, culture

statement, and core values company-wide.

All Other

Š We closed the sale of our Arlington Heights, Illinois property to the Chicago Bears for $197.2 million on February 15,

2023.

Š We completed the acquisition of substantially all of the assets of Peninsula Pacific Entertainment LLC (“P2E”) with a

base purchase price of $2.75 billion on November 1, 2022. The P2E assets acquired included Colonial Downs Racetrack
and six HRM entertainment venues in Virginia, del Lago Resort & Casino in New York, and Hard Rock Hotel & Casino in
Iowa, as well as the development rights for Dumfries and Emporia HRM facilities in Virginia, up to five additional HRM
entertainment venues in Virginia, and ONE Casino & Resort in Virginia in collaboration with Urban One.

– We completed the financing for the acquisition in April 2022 by negotiating favorable pricing and closing a

$1.2 billion Senior Secured Revolver due 2027, $800 million of Senior Secured Delayed Draw Term Loan A due
2027, and $1.2 billion of Senior Notes due 2030 at a 5.75% interest rate.

Š We announced a definitive agreement to acquire Exacta Systems LLC for $250 million. The acquisition will provide the
Company with the opportunity to realize additional synergies related to our recent acquisition of the P2E HRM assets
in Virginia.

The Company’s total shareholder return was (12)% for 2022 compared to (19)% for the Russell 1000 and (18)% for the
S&P 500. The Company’s five-year total shareholder return for 2022 was 178% compared to 55% for the Russell 1000
and 57% for the S&P 500. The preceding shareholder return calculations assume dividends are reinvested.

Š We remain committed to delivering strong financial results and long-term sustainable growth. Our businesses

generate strong cash flow and we have a solid balance sheet that supports our organic growth as well as strategic
acquisitions that we believe will create long-term value for our shareholders.

2023 Proxy Statement

Key 2022 Compensation Actions

The primary elements of our total direct compensation program for the NEOs and a summary of the actions taken by
the Committee during 2022 are set forth below.

Compensation Discussion and Analysis

Compensation
Component

Base Salary
(Page 35)

Annual Cash
Incentive
(Page 36)

Long-Term Equity
Incentive
Compensation
(Page 38)

Link to Business and Talent Strategies

2022 Compensation Actions

• Competitive base salaries help attract and

retain executive talent.

• No salary adjustments for Mr. Carstanjen or
Mr. Mudd as compared to 2021. Merit and
market-based increase to each of Ms. Dall’s,
Mr. Blackwell’s, and Ms. Adams’ base salary
for 2022.

• Focus executives on achieving annual

• No target opportunity adjustments for

financial and non-financial results that are
considered key indicators of financial and
operational performance.

• Annual cash incentives are earned based on
achievement of Adjusted EBITDA and other
strategic, operational and financial measures

• 2022 annual equity-based awards consist of
PSUs and restricted stock units (“RSUs”).

• 2022 PSUs vest based on achievement of
2-year Cumulative Adjusted EBITDA and
3-year Cumulative Cash Flow metrics that
are considered key indicators of long-term
performance, with vesting adjusted based
on relative total shareholder return (“TSR”)
performance to additionally incorporate
creation of shareholder value over the
performance period.

• RSUs provide focus on stock price growth
and serve our talent retention objectives.

Mr. Carstanjen or Mr. Mudd as compared to
2021. Merit and market-based increase to
Ms. Dall’s, Mr. Blackwell’s, and Ms. Adams’
annual cash incentive target opportunity for
2022.

• Annual cash incentive awards were earned
at 153.7% of target due to strong Company
and executive performance.

• Merit and market-based increases to target
value of equity awards for Ms. Dall for 2022.
Mr. Blackwell and Ms. Adams were new
participants in the ELTI in 2022.

• The target value of the equity award mix is

generally balanced between PSUs (50%) and
RSUs (50%).

• 2022 PSUs are subject to a multi-year

performance period and will be earned
based on goals relating to Adjusted EBITDA
(weighted 50%) measured over the 2022-
2023 performance period and Cash Flow
(weighted 50%) measured over the 2022-
2024 performance period, with a relative
TSR modifier of +/- 25% for TSR performance
over the 2022-2024 performance period.

• RSUs vest over three years in equal annual

installments.

2023 Proxy Statement

Compensation Discussion and Analysis

Executive Compensation Philosophy and Core Principles

What We Do

What We Don’t Do

✓ Target Median Compensation Among Peer Group

✗ No Employment Agreements

✓ Executive Stock Ownership Guidelines

✗ No Re-pricing of SARs or Stock Options

✓ Clawback Policy on Cash Bonus and Equity Incentives

✗ No Excise Tax Gross-ups upon Change in Control

✓ PSUs Vesting over Multi-year Performance Period

✗ No Excessive Perquisites

✓ Capped Bonus Payments under Executive Annual Incentive

✗ No Service Based Defined Benefit pension plans

Plan

✓ Capped PSU Vesting Levels

✓ Payouts Tied to Individual and Company Performance, with
Majority of Payout Determined by Pre-Established Formula
and Goal

✓ Use of an Independent Compensation Consultant

✓ Anti-Hedging Policy, Applicable to Directors and Employees

✓ Annual Say-on-Pay Vote

The fundamental philosophy of the Compensation Committee is to provide an executive compensation program that links
pay to business strategy and performance in a manner that is effective in attracting, motivating and retaining key
executives while also aligning the interests of the executives with the interests of shareholders over the long-term. To that
end, the Compensation Committee evaluates the pay practices of its peers and considers the median of the peer group. In
order to continue to support the Company’s high-performance and entrepreneurial culture, the Company’s key principles
underlying the executive compensation program are to:

Attract and retain executives with the skills and experience needed to successfully grow the Company and create value
for shareholders;

Create an entrepreneurial culture and mindset by de-emphasizing fixed pay (primarily salary) and focusing a significant
percentage of compensation on at-risk pay elements (annual and long-term incentives); and

Š Motivate and reward executives for achieving exceptional performance supportive of creating value for shareholders

over the long-term.

The Compensation Committee will continue to evaluate its pay practices and, when it deems appropriate, adjust its pay
practices to support these principles over time.

2022 “Say-on-Pay” Advisory Vote on Executive Compensation

The Compensation Committee monitors closely the results of the annual advisory “say-on-pay” vote and evaluates such
results as one of the many factors considered in connection with the discharge of its responsibilities. In 2022, the Company
provided shareholders a “say-on-pay” advisory vote on its executive compensation program, as disclosed in the Company’s
2022 proxy statement. At the 2022 annual meeting of shareholders, approximately 93% of the votes cast for the
“say-on-pay” proposal were in favor of our executive compensation program. We believe that this result indicates
significant shareholder support for our executive compensation program, and therefore made no changes to our executive
compensation program as a result of this vote. At the 2023 Annual Meeting of Shareholders, we are again holding an
advisory vote on executive compensation and will continue to engage with our shareholders as we constantly consider
further improvements to our executive compensation program.

Role of Management and Independent Advisors

The Compensation Committee meetings are regularly attended by the CEO, the Senior Vice President of Human Resources,
the Vice President of Human Resources, and the General Counsel. The Committee may request the participation of
management or outside consultants as it deems necessary or appropriate. The Committee regularly reports to the Board on
compensation matters and annually reviews the CEO’s compensation with the independent members of the Board.

2023 Proxy Statement

Compensation Discussion and Analysis

The Committee also meets in executive session without any members of management, for the purpose of discussing and
approving compensation for the CEO, as well as other topics. The CEO reviews the performance of, and makes
recommendations to, the Compensation Committee regarding total compensation to be paid to the Company’s executive
officers other than himself, including salary, annual bonus, and long-term incentive awards, as appropriate. Management
also develops and presents to the Committee recommendations for the performance measures and targets to be used to
evaluate annual performance incentives.

After the end of each fiscal year, the Committee conducts a review of the CEO’s performance. As part of this process, the
CEO provides a written assessment of the Company’s performance. The Committee sets the compensation of the CEO in
executive session after considering its assessment of the CEO’s performance, including due consideration of the CEO’s
written assessment of the Company’s performance. Neither the CEO nor any other members of management are present
during this session.

The Committee has sole discretion, at the Company’s expense, to retain and terminate independent advisors, including sole
authority to approve the fees and retention terms for such advisors, if it shall determine the services of such advisors to be
necessary or appropriate. Such advisors are engaged by, and report directly to, the Committee. Since March 2015, the
Committee has retained Frederic W. Cook & Co., Inc. (“FW Cook”) as its independent compensation consultant. The scope
of the engagement of FW Cook includes:

Assisting the Chair of the Committee in establishing appropriate agendas for the Committee meetings;

Reviewing management reports and recommendations to the Committee related to executive compensation matters;

Attending Committee meetings and providing the Committee with input and advice based on the advisor’s broad
experience with market practices, including a perspective regarding the competitive market;

Assisting with the review of pay and performance and the evaluation of payouts under the Company’s annual and
long-term incentive programs;

Assisting with the review and evaluation of non-employee director compensation;

Assisting the Committee in identifying similarly-situated peer group companies;

Providing the Committee and management with data on market practices for executive pay;

On behalf of the Committee, assisting management with disclosures, including this CD&A;

Providing updates to the Committee regarding regulatory developments; and

Assisting the Committee in evaluating future equity grants and cash compensation for the NEOs, including the CEO.

FW Cook did not provide any services to the Company other than advising the Committee as provided above. The
Compensation Committee assessed FW Cook’s independence considering the SEC requirements and NASDAQ listing
standards and determined that FW Cook’s work did not raise any conflict of interest or independence concerns.

Factors Used to Evaluate Pay Decisions

The Company seeks to obtain and retain the services of executives who bring the skills, experience, and motivation deemed
necessary to significantly expand the scope and scale of the Company’s operations. Therefore, compensation decisions for
individual executives are made based on a balance of many subjective factors as evaluated by the CEO in the case of his
direct reports (with Committee review and approval) and the Committee in the case of the CEO. These factors include:

The scope and responsibility of the executive’s position and the perceived level of contribution;

Internal comparisons among the executive’s peers at the Company;

Comparisons among the executive’s peers at the peer group companies, with a target of median among peers;

The recruitment and development of talent in a competitive market;

Target annual incentive opportunities based on the Company’s annual goals with regard to the executive’s position, as
approved by the Committee; and

Long-term incentive opportunities driven by the perceived level of contribution expected of the executive toward
achieving the Company’s growth objectives.

2023 Proxy Statement

Compensation Discussion and Analysis

Each element of compensation is evaluated independently based on the role of that component in achieving the Company’s
overall compensation objectives, with an emphasis on long-term incentives and retention.

In making executive pay decisions, the Committee relies substantially on the advice and experience of FW Cook, its
independent advisor, and the CEO to evaluate the reasonableness of executive pay. While the Committee considers input
from its independent advisor and the CEO, all of the decisions with respect to the Company’s executive compensation
programs are made by the Committee alone and may reflect factors and considerations other than the information and
recommendations provided by management or its independent advisor. In addition, the CEO does not make
recommendations with respect to his own compensation. The Committee determines pay levels and practices based on the
talent needs of the organization as defined by our strategy of growing and diversifying revenues and with the guidance of
the Committee’s independent advisor.

The Committee believes that it is important for the Company to stay competitive on compensation and the Committee,
with the assistance of the Committee’s independent advisor, conducts periodic reviews of compensation relative to
similarly-situated businesses, which can lead to adjustments in compensation and program offerings. The compensation
peer group was selected to represent a reasonable match to the Company in terms of size and business characteristics. The
group consists of public, similarly sized gaming and entertainment companies, where the median net income and market
capitalization approximate the Company’s net income and market capitalization. The Company periodically reviews the
peer group and adjusts, as deemed necessary, for continued appropriateness as a market reference for informing executive
compensation levels. The Company’s peer group for 2022 was as follows:

Fiscal 2022 Peer Group
Aristocrat Leisure Limited (ALL)
Boyd Gaming Corporation (BYD)
Caesars Entertainment, Inc. (CZR)
DraftKings Inc. (DKNG)
Flutter Entertainment PLC (FLTR)
Gaming and Leisure Properties Inc. (GLPI)
Madison Square Garden Entertainment
Corp (MSGE)
MGM Resorts International (MGM)
PENN Entertainment, Inc., Inc. (PENN)
Red Rock Resorts Inc. (RRR)
Light & Wonder, Inc. (LNW)
Wynn Resorts, Limited (WYNN)

Non-Disclosure of Certain Metrics and Targets

The Company believes in transparency and strives to disclose as much information to shareholders as possible except in
situations where we believe that providing full, or even limited, disclosure would be detrimental to the interests of the
Company and our shareholders. We believe certain disclosure could provide our competitors with insight regarding
confidential business strategies without meaningfully adding to shareholders’ understanding of the metric. Although we set
compensation metrics and targets in advance of applicable performance periods, we do not disclose such metrics and
targets in advance due to potential risk to the interests of the Company and our shareholders. We disclose such metrics and
targets alongside actual performance in our annual filings following the completion of the applicable performance periods.

2023 Proxy Statement

Compensation Discussion and Analysis

Components of Compensation

During 2022, the Company used multiple components to provide an overall compensation and benefits package designed to
attract and retain the needed level of executive talent for the Company and to incentivize their performance. The
Compensation Committee believes that the goals that were set for the executives and executive compensation are aligned
with the interests of our investors to support enhancing long-term shareholder value. The following table sets forth the
principal compensation elements of the Company’s 2022 executive compensation program and how each element fits into
the Company’s overall compensation program and is supportive of the Company’s executive compensation objectives.

Element of Compensation

Attraction

Short-Term

Long-Term

Alignment with
Stockholder Interests

Retention

Motivation

Base Salary

Annual Incentive
Compensation

Long-Term Incentive
Compensation

Base Salary

✓

The Committee’s philosophy is that base salaries should meet the objectives of attracting and retaining the executive talent
needed to grow the business and create shareholder value. Upon promotion or other adjustment of responsibilities,
executives receive base pay increases that are intended to be commensurate with their new role or responsibilities, the pay
levels for colleagues at similar levels in the organization and market pay practices, with more modest rates of increase
thereafter.

Peer group market analyses were performed for each of the NEO positions, targeting the median compensation levels
among our peer group.

Based on the above considerations, the Committee set the following base salaries for the Company’s NEOs for 2022:

Name

Position

2021 Base
Salary ($)(1)

2022 Base
Salary ($)(2)(3)

Percent
Increase

William C. Carstanjen

Chief Executive Officer

1,500,000

William E. Mudd

President & COO

1,100,000

Marcia A. Dall

EVP & CFO

700,000

850,000

Bradley K. Blackwell

EVP & General Counsel

500,000

600,000

Maureen Adams

EVP, Gaming Operations

334,750

575,000

21%

20%

72%

(1) Annual rate of base compensation shown as of December 31, 2021.

(2) Annual rate of base compensation shown as of December 31, 2022. Actual salaries paid in 2022 are shown in the 2022 Summary

Compensation Table on page 44.

(3) Peer group market analyses were performed for each of the NEO positions, and NEO base salary levels were adjusted (for Ms. Dall)
and set (for Mr. Blackwell and Ms. Adams) in response to those analyses. Consistent with the Company’s compensation philosophy,
adjustments were made with respect to Ms. Dall to better position her base salary compared to the peer group.

2023 Proxy Statement

Compensation Discussion and Analysis

Executive Annual Incentive Plan

Our executive annual incentive plan is designed to motivate and reward our NEOs for achieving annual performance
objectives by tying the majority of the EAIP award to attainment of a pre-established financial goal. We believe this
program supports our “pay-for-performance” culture. 75% of the target EAIP award is determined formulaically based on
corporate Adjusted EBITDA performance, and the remaining 25% is based on a qualitative assessment of the attainment of
other financial, strategic, operational and individual goals established by the Committee.

Base Salary

Target
Percentage

75% Financial
Performance

25% Qualitative
Performance

Payout: 0% - 200%

The Committee utilized Adjusted EBITDA as elements in both the Company’s EAIP and ELTI in recognition that Adjusted
EBITDA is viewed as a core driver of the Company’s performance and shareholder value creation. In designing the
Company’s executive compensation program, the Committee supplemented this measure with additional performance
measures in order to strike an appropriate balance with respect to incentivizing top-line growth, profitability, non-financial
business imperatives and shareholder returns over both the short-term and long-term horizons.

Financial Component (75%)

As noted above, 75% of the target EAIP payout was determined formulaically based on achievement of the annual Adjusted
EBITDA (as defined in in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in
the Form 10-K for the year ended December 31, 2022) target (the “Financial Component”). In February 2022, the
Committee set an Adjusted EBITDA target of $709.3 million, which was substantially higher than the actual 2021 Adjusted
EBITDA performance of $627.0 million. The Compensation Committee believed at the time that the performance targets
were rigorous yet achievable, and therefore established the targets so that the targets would be achieved, at the target
performance level, if the Company successfully executed against its operating plan for 2022. Potential EAIP payouts for the
Financial Component ranged from 0% to 200% (i.e., 0% to 150% of total target EAIP award) based on the achievement of
the pre-established financial goal in accordance with the following table:

Percentage of Adjusted
EBITDA Goal Achieved*

Below 80%

80%

100%

110%

120%

Percentage of Financial
Component Awarded

Percentage of Total Target
EAIP Award Awarded

50%

100%

150%

200%

37.5%

75%

112.5%

150%

Amounts in between based on interpolation between the points

In 2022, the actual Company performance was $763.6 million in Adjusted EBITDA, which was 7.7% higher than the target of
$709.3 million. This performance resulted in a payout for each NEO at 138.3% of target for the Financial Component (i.e.,
103.7% of the target EAIP award) as detailed below.

2022 Adjusted EBITDA
Target (in millions)

2022 Actual Adjusted
EBITDA (in millions)

Actual Performance as a
percentage of Adjusted
EBITDA Target

Percentage of Financial
Component

Percentage of Total Target
EAIP Award

$709.3

$763.6

108%

138.3%

103.7%

2023 Proxy Statement

Compensation Discussion and Analysis

Qualitative Component (25%)

Pursuant to the EAIP, the Committee established secondary performance goals for the Company and its executives to be
used to determine the vesting of the qualitative component under the EAIP, weighted 25% (the “Qualitative Component”).

The Committee set performance goals for 2022, based upon a comprehensive assessment of the Company against its long-
term strategic plan and its ability to achieve said goals with its current leadership team and key employees.

Individual performance by the NEOs (as measured by various factors, including, but not limited to, continued growth and
diversification of the Company’s asset portfolio, customer and employee satisfaction, and the completion of certain
specified legislative and regulatory outcomes), and business unit performance led by the Company’s key employees (as
measured by, among other things, revenue performance) was also considered in evaluating the Company’s performance,
and determining the level of compensation deemed necessary to incent and reward the NEOs and key employees to
continue to drive growth. These goals relate to the Company’s overall financial goals, strategic goals, and business segment
goals, respectively, with no specific weighting attributed to any one goal.

In evaluating 2022 performance, a few of the accomplishments that were considered to be significantly above target by the
Committee included:
Š

The completion of the acquisition of substantially all of the assets of P2E with a base purchase price of $2.75 billion on
November 1, 2022. The P2E assets acquired included Colonial Downs Racetrack and six HRM entertainment venues in
Virginia, del Lago Resort & Casino in New York, and Hard Rock Hotel & Casino in Iowa, as well as the development
rights for Dumfries and Emporia HRM facilities in Virginia, up to five additional HRM entertainment venues in Virginia,
and ONE Casino & Resort in Virginia in collaboration with Urban One.

The completion of the financing for the P2E acquisition in April 2022 by negotiating favorable pricing and closing a
$1.2 billion Senior Secured Revolver due 2027, $800 million of Senior Secured Delayed Term Loan A due 2027, and
$1.2 billion of Senior Secured Notes due 2030 at a 5.75% interest rate.

The announcement of a definitive agreement to acquire Exacta Systems, LLC, for $250 million. The acquisition will
provide the Company with the opportunity to realize additional synergies related to our recent acquisition of the P2E
HRM assets in Virginia.

The acquisition of Chasers Poker Room in Salem, New Hampshire in September 2022, allowing the Company to expand
its HRM strategy to the New England market.

The acquisition of Ellis Park Racing & Gaming in Henderson, Kentucky, as well as the opportunity to construct an HRM
facility in Owensboro, Kentucky.

The closing of the Calder land sale for $291.0 million in June 2022.

Churchill Downs Racetrack

The completion of the Homestretch Club prior to the 148th Kentucky Derby in May 2022, the construction of the
1st Turn Expansion which will be completed for the 149th Kentucky Derby in May 2023, and the launching of the
transformative Paddock redevelopment project that will be completed for the 150th Kentucky Derby in May 2024.

TwinSpires

The strategic decision to exit the Online Sports & Casino business in February 2022.

The execution of multi-year agreements with FanDuel Group and DraftKings to expand wagering on horse racing,
fees on ADW technology and related services, and sponsorships of the Kentucky Derby.

The execution of strategic market access agreements with Bet365 in Pennsylvania and Golden Nugget in Indiana
to monetize our online sports and iGaming skins.

The ongoing capital management execution enabling the Company to fund capital projects, grow dividends, and buy
back shares while maintaining one of the strongest balance sheets in the industry.

The building of relationships with investors and analysts that has created substantial support for long-term
shareholder value creation.

The expansion of our ESG efforts including the ongoing promotion of responsible gaming; initiatives at our properties
to lessen energy and water usage, to decrease carbon emissions, and to responsibly manage waste; increasing
investments in the communities in which we operate and supporting our teams through educational and leadership
development; and further diversification of our Board and increasing engagement with our shareholders.

2023 Proxy Statement

Compensation Discussion and Analysis

In determining the EAIP payouts for the Qualitative Component, the Compensation Committee exercises its discretion to
determine whether to payout at, above, or below the target opportunities based upon its review of the outcomes
evaluated against Company and individual performance. The individual Qualitative Component awards for Mr. Carstanjen,
Mr. Mudd, Ms. Dall, Mr. Blackwell, and Ms. Adams were equal to 200% of target (50% of total target EAIP award) made
pursuant to the EAIP in recognition of the NEOs’ respective roles in driving performance during the period ending
December 31, 2022.

Summary of 2022 EAIP Awards

As noted above, the Company exhibited strong overall financial performance in 2022 and the NEOs were viewed by the
Committee to be the primary parties responsible for the actual performance relative to the performance goals established
with respect to 2022. The Committee, after considering the Company’s overall performance, awarded the NEOs the total
EAIP awards equal to 153.7% of target as shown in the table below and in the 2022 Summary Compensation Table in the
column labeled “Non-Equity Incentive Plan Compensation.”

Name

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

Target Incentive
Award as a
Percentage of
Salary(1)

Target Incentive
Award in ($)

Maximum Target
Incentive Award as a
Percentage of
Salary

Maximum Target
Incentive
Award in ($)

Actual 2022
Incentive
Award in ($)

175%

125%

110%

85%

80%

2,625,000

1,375,000

935,000

510,000

460,000

350%

250%

220%

170%

160%

5,250,000

4,035,025

2,750,000

2,113,585

1,870,000

1,437,238

1,020,000

783,948

920,000

707,090

(1) Ms. Dall’s target incentive award as a percentage of salary was adjusted in 2022 from 100% to 110% in response to the peer group
compensation analysis performed by FW Cook. Consistent with the Company’s compensation philosophy, adjustments were made
to better position Ms. Dall’s target incentive compared to the peer group. In addition, when evaluating the adjustments for Ms. Dall,
the Committee also considered her individual performance and criticality to the Company.

Long-Term Incentives

The objective of the Company’s long-term incentive compensation program is to support the entrepreneurial mindset
desired of management by the Board of Directors by providing an opportunity to earn significant equity in the Company for
achieving significant performance improvements.

The Company maintains the ELTI, pursuant to which the NEOs may earn variable equity payouts based upon the Company
achieving certain key performance metrics. The purpose of the ELTI is to provide participants with a long-term incentive
program that is designed to be market-competitive and provides long-term incentives on a regular, predictable, and annual
basis. Eligible participants (as determined by the Committee) may be members of the Company’s senior executive team
and/or such other executives and key contributors as the Committee may designate from time to time. As and to the extent
determined by the Committee as part of the annual compensation planning process for participants, the CEO will
participate in the ELTI at a rate determined by the Committee. No individual will have an automatic right to participate in
the ELTI. A summary of the 2022 terms and applicable award opportunities, granted by the Committee to the NEOs, is
provided below.

During the beginning of 2022, the CEO recommended employees (other than with respect to himself) to the Committee for
participation in the ELTI for 2022 and their respective specific levels of proposed participation. Awards granted to eligible
employees under the ELTI may be in the form of RSUs, PSUs, or both. To pursue the key objective of linking executive
compensation with Company performance, the Committee generally aims to deliver at least 50% of the grant value of the
2022 awards as PSUs.

2023 Proxy Statement

The Committee approved the 2022 RSU awards on February 10, 2022, and the PSU awards (for the 36-month performance
period of January 1, 2022 through December 31, 2024) on July 12, 2022. The 2022 awards are as follows:

Compensation Discussion and Analysis

Executive Officer

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

RSUs

PSUs

Total

$(1)

$(2)

$(3)

14,703 3,300,088 14,703 3,238,336 29,406 6,538,424

6,684 1,500,224

6,684 1,472,151 13,368 2,972,375

4,902 1,100,254

4,901 1,079,445

9,803 2,179,699

2,451

550,127

2,451

539,833

4,902 1,089,960

2,229

500,299

2,228

490,717

4,457

991,016

(1) The grant date fair value of the time-vesting RSUs was calculated utilizing the closing price of the Company’s common stock as of

February 10, 2022 multiplied by the total number of time-vesting RSUs granted.

(2) The grant date fair value for the PSUs was calculated based on the probable achievement of the performance goals and a Monte-
Carlo simulation model, which factors in the value of the relative TSR modifier (defined below) that is applied to the award before
the share-based payment vests. The PSUs represent the target opportunity, and corresponding fair value, available to the grantees
should the Company achieve the pre-determined performance metrics. Actual shares that vest pursuant to the PSUs may be more
or less given the performance on the selected metrics discussed below.

(3) The NEOs’ long-term equity awards were adjusted (for Ms. Dall) and set (for Mr. Blackwell and Ms. Adams) in 2022 in response to

the peer group compensation analysis performed by FW Cook. Consistent with the Company’s compensation philosophy,
adjustments were made to better position compensation levels compared to our peer group. In approving the NEOs’ long-term
equity award levels, the Committee allocated a significant portion of their total target direct compensation increases to their target
long-term equity award levels to be consistent with the Company’s long-standing compensation philosophy of aligning executive
officers’ interests with shareholders through the risks and rewards of equity ownership.

With respect to the PSU awards in the table above, performance will be based on the following three Performance
Measures during the 36-month period from January 1, 2022 through December 31, 2024 (the “Performance Period”):

2-Year Cumulative Adjusted Earnings before Interest, Tax, Depreciation and Amortization (“Adjusted EBITDA”) (50%
weight). Adjusted EBITDA measured during the two-year period beginning as of the start of the Performance Period
relative to the pre-established goals set for such measurement period, will be derived from the Company’s
consolidated financial statements with any necessary adjustments similar to those described further below;

3-Year Cumulative Cash Flow Metric (“Cash Flow Metric”) (50% weight). Cumulative Cash Flow (i.e. the sum of the free
cash flows from the annual periods ending December 31 of each of 2022, 2023, and 2024, respectively, where the Cash
Flow Metric goals are set at the beginning of each of those three periods) will also be derived from the Company’s
consolidated financial statements with any necessary adjustments similar to those described further below; and

Relative Total Shareholder Return Modifier. The Company’s TSR modifier will be determined by ranking the return on
the Company’s shares against those of the companies in the Russell 1000 index, in each case, over the Performance
Period. The PSU awards determined by the Adjusted EBITDA and Cash Flow Metric performance goals described above
will then be adjusted based on the Company’s relative TSR performance, by increasing the PSU awards by 25% if the
Company’s TSR is in the top quartile of the Russell 1000 index, decreasing the PSU awards by 25% if the Company’s TSR
is in the bottom quartile of the Russell 1000 index, and providing no change to the PSU awards if the Company’s TSR is
in the middle two quartiles.

The maximum number of PSUs that can be earned for the Performance Period is 250% of target, with payout for each
performance measure determined by a payout curve, as achievement that lies between two goals will be interpolated. At
the end of the Performance Period, the Committee will review performance achieved on each pre-established Performance
Measure.

With respect to the RSU awards, the RSUs vest (i) for Mr. Carstanjen, Mr. Mudd and Ms. Dall, in one third (1/3) increments
on each of December 31, 2022, December 31, 2023 and December 31, 2024, respectively, and (ii) for Mr. Blackwell and

2023 Proxy Statement

Compensation Discussion and Analysis

Ms. Adams, in one third (1/3) increments on each of February 10, 2023, February 10, 2024, and February 10, 2025,
respectively, all generally subject to the executive’s continued employment through the applicable vesting date.

With respect to the performance period and related PSU awards under the ELTI for January 1, 2020 through December 31,
2022, the actual performance was certified by the Compensation Committee at its February 2023 meeting (with a TSR at
63%, in the top 16% of the Russell 2000 over the performance period) as set forth below:

$ in Millions

Target

Maximum

Actual

% of Target

Projected
Payout

Weighted
Payout

3-year Cumulative Adjusted EBITDA:

$1,654.0

$1,984.8

$1,951.7

118.0%

180.0%

90.0%

3-year Cumulative Cash Flow Metric:

$ 723.3

$ 868.0

$1,151.9

159.2%

200.0% 100.0%

Total Weighted Payout:

TSR Modifier:

Target Multiplier:

190%

125%

237.5%

Adjusted EBITDA—as defined in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations in the Form 10-K for the year ended December 31, 2022.

Adj. EBITDA as report in the 2022 Form 10-K

Calder Land Sale Adjustment

Adjusted EBITDA for Compensation Purposes ($ in millions)

2020

$286.5

N/A

$286.5

2021

$627.0

N/A

$627.0

2022

$ 763.6

$ 274.6

$1,038.2

Cash Flow Metric—Our cash flow metric is defined as Cash Flows from Operating Activities and Discontinued
Operations in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in the
Form 10-K for the year ended December 31, 2022, not including the impact from the change in restricted cash, plus
distributions of capital from equity investments less capital maintenance expenditures.

$ in millions

Cash Flow from Operating Activities

Operating Activities of Discontinued Operations

Capital Maintenance Expenditures

Change in Restricted Cash

Calder Land Sale Adjustment

Cash Flow Metric

2020

$143.2

$ (1.3)

$ (23)

$ (7.3)

N/A

$111.6

2021

$ 459.5

$(124.0)

$ (39.5)

$ (10.7)

N/A

$ 285.3

2022

$510.8

$ 26.0

$ (50.2)

$ (10.6)

279.0

$755.0

•

Total Shareholder Return—defined as the Company’s stock price as of the end of the measurement period, assuming
reinvestment of dividends, divided by the Company’s stock price as of the beginning of the measurement period. The
Company’s Total Shareholder Return for the period January 1, 2020 through December 31, 2022 was 63%.

2023 Proxy Statement

Based on the performance achievement as discussed above, the participating NEOs received PSUs as follows:

Compensation Discussion and Analysis

Name(1)

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Target PSU
Award

20,592

9,360

4,056

Target
Multiplier

237.5%

PSU
Payout

48,906

22,321

9,633

(1) Mr. Blackwell and Ms. Adams each became an NEO after the 2020 ELTI awards were granted and, accordingly, did not

receive a 2020 ELTI award.

Executive Stock Ownership Guidelines

Our Board of Directors has adopted minimum stock ownership guidelines for our executive officers. The principal objective
of the guidelines is to enhance the linkage between the interests of shareholders and our executive officers by requiring a
meaningful, minimum level of stock ownership. The current guidelines provide that, within five (5) years of becoming
subject to the stock ownership guidelines, our CEO should own shares valued at an amount equal to at least six times
(6x) his base salary, our President & COO should own shares valued at an amount equal to at least four times (4x) his base
salary, and our EVP & CFO and other executive officers should own shares valued at an amount equal to at least three times
(3x) the executive’s base salary. As of the Record Date, each NEO met or exceeded the guidelines or were within the five
(5) year transition period.

Executive Officer

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

✓ = Met guidelines.

Ownership
Guidelines

Met Guidelines

✓

Five-Year Transition
Period(1)

(1) Mr. Blackwell and Ms. Adams became NEOs in 2022, and will not be required to satisfy the Executive Stock Ownership Guidelines

until July 2027.

Anti-Hedging Policy

Under the terms of the Company’s Statement of Company Insider Trading Policy, our directors, officers and other
employees are prohibited from engaging in hedging and monetization transactions and transactions that involve exchange-
traded options or short sales of the Company’s securities. Because hedging transactions might permit a director, officer or
other employee to continue to own our securities without the full rewards and risks of ownership, such hedging
transactions are prohibited.

Clawback Policy

Under the terms of the Company’s Executive Incentive Compensation Recoupment Policy, the NEOs’ incentive
compensation is subject to “clawback” in the event of a material restatement of the Company’s financial statements due to
material noncompliance with any financial reporting requirement under securities laws that would have resulted in less
incentive compensation awarded or paid to the executive had the financial results been properly reported during the three

2023 Proxy Statement

Compensation Discussion and Analysis

fiscal years prior to a material restatement. The Committee may require the NEO to repay all or a portion of compensation
paid and cancel unvested or vested incentive compensation awarded during the applicable time-period. The Company will
review and modify the policy as necessary to reflect the final NASDAQ listing rules adopted to implement the compensation
recovery requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Deferred Compensation and Other Benefits

The Company’s philosophy is to provide retirement and savings benefits to executives which are commonly provided by
other public companies. The benefits available to executives include:

401(k). The Company maintains a 401(k) Retirement Plan, which is a profit sharing plan that is intended to be a qualified
retirement plan under Section 401(a) of the Internal Revenue Code (the “Code”). The 401(k) Retirement Plan allows all
employees who meet the eligibility requirements to become participants. Participants may make salary deferral
contributions pursuant to Section 401(k) of the Code up to limits prescribed by the plan and the Code. The Company makes
matching contributions with respect to such salary deferrals at a rate of 100% on the first 3% of compensation deferred and
50% on deferrals in excess of 3% of compensation deferred but no more than 5% of compensation deferred. Salary deferral
contributions and matching contributions are fully vested at all times. Participants are allowed to direct investment of their
accounts under the 401(k) Retirement Plan into as many as 29 investment options. All assets of the 401(k) Retirement Plan
are held in a trust that is intended to be qualified under Section 501 of the Code.

Restricted Stock Unit Deferral Plan. The Company maintains the Churchill Downs Incorporated Restricted Stock Unit
Deferral Plan (the “Deferral Plan”). Under the Deferral Plan, certain individual employees who are management or highly
compensated employees of the Company may elect to defer settlement of RSUs granted to them pursuant to the 2016
Omnibus Stock Incentive Plan that are due to be earned and that would otherwise be settled with respect to a given year
pursuant to the terms of an RSU agreement between the Company and such employees. The Company believes that the
Deferral Plan further aligns with its overall compensation program objectives by aligning the long-term interests of
participants and shareholders through the deferral of RSUs.

Please see the 2022 Nonqualified Deferred Compensation Table, on page 49, and the accompanying narrative below for
further information regarding the Deferral Plan.

Allowances and Other Benefits. The Company’s standard, non-cash executive benefits are Company-paid premiums on
executive term life insurance and an optional supplemental long-term disability income plan for each NEO. These plans
provide benefits which are similar to those provided to eligible employees, but extend the benefit levels to reflect the
income of the executive officers. For Company executives, the Company may reimburse spouse’s travel expenses for travel
with the executive on Company business on a case-by-case basis.

Post-Termination Arrangements. The Compensation Committee believes that arrangements that provide benefits upon
termination or a change in control of the Company support the goals of attracting and retaining qualified executives. Such
benefits include clarifying the terms of employment and reducing the risks to the executive where the executive believes
that either the Company may undergo a merger or be acquired. In addition, the Compensation Committee believes that
such agreements align the interests of executives with the interests of shareholders if a qualified offer to acquire the
Company is made, in that each of the executives would likely be aware of or involved in any such negotiation and it is to the
benefit of shareholders to have the executives negotiating in the best interests of the Company without regard to their
personal financial interests. The Compensation Committee has adopted forms of Executive Change in Control, Severance
and Indemnity Agreements (the “Change in Control Agreements”) applicable to the NEOs. The terms of the Change in
Control Agreements were determined after considering market data and the input of the Committee’s independent
compensation consultant at the time. The Change in Control Agreements provide, subject to the Company receiving a
general release of claims from the executive, severance benefits in the event the executive’s employment is terminated
(i) by the Company other than for “Cause” (as defined in the Change in Control Agreements) or due to “Disability” (as
defined in the Change in Control Agreements) or death or (ii) by the executive for “Good Reason” (as defined in the Change
in Control Agreement), with enhanced benefits for a termination in connection with a “Change in Control” (as defined in
the Change in Control Agreement). All equity-based awards in effect at the time of termination for the aforementioned
reasons will remain governed by the applicable plan or award agreement. The Change in Control Agreements do not
provide for any tax gross-ups for excise taxes payable following a Change in Control.

Please see the “Potential Payments Upon Termination or Change of Control” section for a summary of the severance
benefits payable to the NEOs under their applicable Change in Control Agreements.

2023 Proxy Statement

Compensation Discussion and Analysis

Compensation Committee Report

The Compensation Committee has reviewed and discussed the information appearing above under the heading
“Compensation Discussion and Analysis” with management and, based on that review and discussion, has recommended to
the Board of Directors that the “Compensation Discussion and Analysis” section be included in this Proxy Statement and the
Company’s Annual Report on Form 10-K for the year ending December 31, 2022.

Compensation Committee of the Board of Directors:

Daniel P. Harrington, Chair
Robert L. Fealy
Douglas C. Grissom
Paul C. Varga
R. Alex Rankin, ex officio

2023 Proxy Statement

2022 Summary Compensation Table

2022 SUMMARY COMPENSATION TABLE

The following table provides information regarding compensation earned by our Chief Executive Officer, President & Chief
Operating Officer, Executive Vice President & Chief Financial Officer, Executive Vice President, General Counsel and
Executive Vice President, Gaming Operations (sometimes referred to in this proxy statement as the “Named Executive
Officers” or “NEOs”) in 2022, and to the extent required by SEC disclosure rules, 2021 and 2020.

Name and Principal Position

William C. Carstanjen

Chief Executive Officer

William E. Mudd

President and Chief
Operating Officer

Marcia A. Dall

Executive Vice President
and Chief Financial Officer

Bradley K. Blackwell(4)

Executive Vice President and
General Counsel

Maureen Adams(4)

Executive Vice President,
Gaming Operations

Base
Salary
($)

Bonus
($)

Stock
Awards
($)(1)

Non-Equity
Incentive Plan
Compensation
($)(2)

All Other
Compensation
($)(3)

1,500,000

1,359,952

1,100,000

1,025,337

826,923

700,000

668,510

-0-

6,538,424

4,035,025

6,986,731

5,250,000

7,057,084

2,056,389

2,972,375

2,113,585

3,176,075

2,750,000

3,207,766

1,077,156

2,179,699

1,437,238

1,588,038

1,400,000

1,390,032

548,370

19,664

18,552

17,714

18,346

16,616

15,748

20,452

18,935

18,240

Year

2022

2021

2020

2022

2021

2020

2022

2021

2020

Total
($)

12,093,113

13,755,283

10,491,139

6,204,306

7,042,691

5,326,007

4,464,312

3,706,973

2,625,152

2022

584,615

-0-

1,089,960

783,948

16,904

2,475,427

2022

538,038

-0-

991,016

707,090

19,774

2,255,918

(1)

In accordance with the SEC executive compensation disclosure rules, the amounts shown in 2022 for stock awards represent the
grant date fair value of such awards determined in accordance with Financial Accounting Standards Board Accounting Standards
Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”), but disregarding the estimate of forfeitures, in
connection with service-based RSUs and PSUs granted pursuant to the ELTI to each of our NEOs in 2022. The amounts included in
the Stock Awards column for the PSUs granted during 2022 are calculated based on the probable satisfaction of the performance
conditions for such awards as of the date of grant. Assuming the highest level of performance is achieved for the 2022 PSUs, the
maximum value of such PSUs at the grant date would be as follows: Mr. Carstanjen—$7,286,072; Mr. Mudd—$3,312,256; Ms. Dall—
$2,428,691; Mr. Blackwell—$1,214,593; and Ms. Adams—$1,104,085. See Note 11 to Consolidated Financial Statements included in
our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the relevant assumptions used in
calculating the amounts reported for 2022.

(2) Amounts in this column represent payments for performance under the EAIP. The NEOs received their 2022 EAIP awards in February

2023.

(3) The table below shows the components of this column for 2022, which include the Company match for each individual’s defined

contribution plan contributions, life insurance premiums, and supplemental long-term disability insurance premiums.

(4) Mr. Blackwell and Ms. Adams each became an NEO in 2022.

2023 Proxy Statement

All Other Compensation for Fiscal Year Ended December 31, 2022

ALL OTHER COMPENSATION FOR FISCAL YEAR
ENDED DECEMBER 31, 2022

Name

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

Company
Contributions
Under Defined
Contribution
Plans(1)
($)

Life
Insurance
Premiums(2)
($)

Supplemental
Long-Term
Disability
Insurance
Premiums(3)
($)

Total All Other
Compensation
($)

12,200

5,663

2,886

3,495

1,367

1,724

1,801

3,260

4,757

3,337

5,850

19,664

18,346

20,452

16,904

19,774

(1) This amount consists of Company contributions to 401(k) plans. In accordance with the adoption of the Deferral Plan, no Company

contributions were made to non-qualified deferred compensation plans with respect to 2022.

(2) The NEOs receive group life coverage equal to two times base salary with a $3 million maximum. The amounts in this column are the

premiums for the NEOs’ coverage.

(3) The NEOs receive long-term disability coverage equal to sixty percent (60%) of their base salary with a $10,000 per month maximum
in the event of a long-term disability. The Company offers supplemental long-term disability income insurance to help fill the gap
between the executive’s regular monthly net income and the amount that would be paid under the Company’s standard long-term
disability insurance policy that is available to other salaried employees. The amounts in this column are the premiums for the NEOs’
supplemental coverage paid by the Company.

2023 Proxy Statement

Grants of Plan-Based Awards for Fiscal Year Ended December 31, 2022

GRANTS OF PLAN-BASED AWARDS FOR FISCAL
YEAR ENDED DECEMBER 31, 2022

The grants in the following table are generally described in the CD&A, beginning on page 27.

Name

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)(3)

Grant
Date Fair
Value of
Stock
Awards
($)

14,703

3,300,088

Estimated Future Payout
under
Non-Equity Incentive Plan
Awards(1)

Estimated Future Payout
under
Equity Incentive Plan
Awards(2)

Grant
Date

Threshold
($)(4)

Target
($)

Max
($)

Threshold
(#)

Target
(#)

Max
(#)

2,625,000 5,250,000

1,375,000 2,750,000

935,000 1,870,000

510,000 1,020,000

460,000

920,000

02/10/2022

07/12/2022

02/10/2022

07/12/2022

02/10/2022

07/12/2022

02/10/2022

07/12/2022

02/10/2022

07/12/2022

7,352

14,703 36,758

3,238,336

3,342

6,684 16,710

1,472,151

6,684

1,500,224

2,451

4,901 12,253

1,079,445

4,902

1,100,254

1,226

2,451

6,128

539,833

2,451

550,127

1,114

2,228

5,570

490,717

2,229

500,299

(1) Represents annual incentive bonus opportunities under the EAIP for each of the NEOs. See “Executive Annual Incentive Plan”
beginning on page 36. Actual bonus payments for 2022 are listed under Non-Equity Incentive Plan Compensation in the 2022
Summary Compensation Table on page 44.

(2) Represents the PSUs granted under the ELTI to each of the NEOs, which vest based on the Company’s performance with respect to

Adjusted EBITDA for compensation purposes and the cash flow metric over the 2022-2023 performance period. The vesting of these
awards is also subject to a TSR modifier which could increase or decrease the number of shares earned under an award by 25%, as
more fully explained on pages 38-41.

(3) Represents RSUs granted under the ELTI to each of the NEOs, which are scheduled to vest over three years in equal annual

installments (on December 31, 2022, December 31, 2023, and December 31, 2024 for Messrs. Carstanjen and Mudd and Ms. Dall
and on February 10, 2023, February 10, 2024, and February 10, 2025 for Mr. Blackwell and Ms. Adams), subject generally to the
NEO’s continued employment through the applicable vesting date.

(4) The EAIP threshold represents a 50% payout of the pre-established financial performance goal, which constitutes 75% of the target
EAIP payout, based upon achievement of the minimum annual Adjusted EBITDA target. The individual performance goal has a range
of 0% to 200% payout depending on achievement of goals, which constitutes the remaining 25% of the total EAIP payout and is not
included in the threshold.

2023 Proxy Statement

Outstanding Equity Awards at Fiscal Year-End for Fiscal Year Ended December 31, 2022

OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END FOR FISCAL YEAR ENDED
DECEMBER 31, 2022

The following table provides information regarding unvested stock awards held by each of the NEOs on December 31, 2022.
As of such date, none of our NEOs held any outstanding option awards.

Stock Awards

Number of Shares
or Units of Stock That
Have Not Vested
(#)

Market Value of
Shares or Units of Stock
That Have Not Vested
($)(1)

Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights That
Have Not Vested
(#)

Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units
or Other Rights That
Have Not Vested
($)(1)

242,920(2)

149,271(2)

4,451(2)

4,965(2)

3,142(2)

51,360,576

31,560,368

941,075

1,049,750

664,313

29,199(3)

13,274(3)

8,196(3)

2,451(3)

2,228(3)

6,173,545

2,806,522

1,732,880

518,215

471,066

Name

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

(1) Based on the December 30, 2022 closing price of CHDN of $211.43 per share.

(2) Represent awards under the ELTI consisting of RSUs and PSUs for continued employment periods from January 1, 2021
- October 30, 2025, including the 2018 PSUs granted to Messrs. Carstanjen and Mudd which remain subject to time-
based vesting. The 242,920 RSUs for Mr. Carstanjen vest as follows: 75,971 on October 30, 2023; 10,106 on
December 31, 2023; 75,971 on October 30, 2024; 4,901 on December 31, 2024; and 75,971 on October 30, 2025. The
149,271 RSUs for Mr. Mudd vest as follows: 47,483 on October 30, 2023; 4,594 units on December 31, 2023; 47,483 on
October 30, 2024; 2,228 units on December 31, 2024; and 47,483 on October 30, 2025. The 4,451 RSUs for Ms. Dall
vest as follows: 2,817 on December 31, 2023 and 1,634 on December 31, 2024. The 4,965 RSUs for Mr. Blackwell vest
as follows: 1,606 units on February 10, 2023; 936 units on February 12, 2023; 1,606 units on February 10, 2024; and
817 units on February 10, 2025. The 3,142 RSUs for Ms. Adams vest as follows: 1,059 units on February 10, 2023; 281
units on February 12, 2023; 1,059 units on February 10, 2024; and 743 units on February 10, 2025.

(3) Represent awards under the ELTI consisting of PSUs for certain performance periods from January 1, 2021 through

December 31, 2024, which are subject to vesting upon meeting the performance criteria at the end of each applicable
performance period. The 29,199 PSUs for Mr. Carstanjen are subject to vesting on the following dates: 14,496 units on
December 31, 2023 and 14,703 units on December 31, 2024. The 13,274 PSUs for Mr. Mudd are subject to vesting on
the following dates: 6,590 units on December 31, 2023 and 6,684 units on December 31, 2024. The 8,196 PSUs for
Ms. Dall are subject to vesting on the following dates: 3,295 units on December 31, 2023 and 4,901 units on
December 31, 2024. The 2,451 PSUs for Mr. Blackwell are subject to vesting on December 31, 2024. The 2,228 PSUs for
Ms. Adams are subject to vesting on December 31, 2024. For purposes of this table, the PSUs are reported assuming
target performance.

2023 Proxy Statement

Stock Vested for Fiscal Year Ended December 31, 2022

STOCK VESTED FOR FISCAL YEAR ENDED
DECEMBER 31, 2022

The following table provides information concerning vesting of stock awards during 2022 for each of the NEOs. None of our
NEOs held any stock options during 2022.

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

Stock Awards

Number of Shares
Acquired on Vesting

Value Realized
on Vesting(2)

129,780

$29,049,057(1)

77,428

12,450

3,130

1,036

$17,056,688

$ 3,002,018(1)

694,241

229,981

(1) Pursuant to the Deferral Plan, Mr. Carstanjen deferred 11,706 shares on vesting and Ms. Dall deferred 1,303 shares on

vesting, which are excluded from these amounts and reported in the table under the “Nonqualified Deferred
Compensation Plan for Fiscal Year Ended December 31, 2022.”

(2) The RSUs vested reflect the market value of the stock on the day the stock vested. The 2020 PSU awards were settled

based upon the closing price of the Company’s common stock on February 15, 2023 ($249.81 per share) after
certification by the Compensation Committee.

2023 Proxy Statement

Nonqualified Deferred Compensation for Fiscal Year Ended December 31, 2022

NONQUALIFIED DEFERRED COMPENSATION FOR
FISCAL YEAR ENDED DECEMBER 31, 2022

The following table provides information regarding the deferred settlement of RSUs granted to certain NEOs pursuant to
the 2016 Omnibus Stock Incentive Plan, in accordance with the Deferral Plan adopted by the Company, effective January 1,
2020 and compensation that had been previously deferred by the NEOs pursuant to the terms of the Company’s legacy
nonqualified deferred compensation plan.

Name

William C. Carstanjen

Deferral Plan

Legacy Nonqualified Deferred Compensation Plan

William E. Mudd

Deferral Plan

Legacy Nonqualified Deferred Compensation Plan

Marcia A. Dall

Deferral Plan

Legacy Nonqualified Deferred Compensation Plan

Bradley K. Blackwell

Deferral Plan

Legacy Nonqualified Deferred Compensation Plan

Maureen Adams

Deferral Plan

Legacy Nonqualified Deferred Compensation Plan

Executive
Contributions
in Last Fiscal
Year ($)(1)

Registrant
Contributions
in Last Fiscal
Year ($)

Aggregate
Earnings
(Losses) in Last
Fiscal Year ($)

Aggregate
Withdrawals
Distributions ($)

Aggregate
Balance at Last
Fiscal Year End ($)(1)(2)

2,474,923

-0-

275,432

-0-

(539,181)

-0-

(236,993)

(76,456)

(70,310)

-0-

(30,812)

-0-

(18,740)

-0-

6,344,734

-0-

901,999

824,251

286,358

-0-

77,188

-0-

63,880

(1) Amounts in this column represent the market value of RSUs which vested on December 31, 2022 but were elected to be deferred
under the Deferral Plan. For purposes of this disclosure, market value is determined using the December 31, 2022 closing price of
CHDN of $211.43 per share.

(2) Of the totals in this column, the following totals have been reported in the Summary Compensation Table for the previous three

(3) years:

Name

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell(2)

Maureen Adams(2)

2020
($)

2021
($)

2022
($)(1)

1,290,338

2,808,791

2,474,923

-0-

252,176

312,541

275,432

N/A

-0-

(1) Amounts in this column represent the market value of RSUs which vested on December 31, 2022 but were elected to

be deferred under the Deferral Plan. For purposes of this disclosure, market value is determined using the
December 30, 2022 closing price of CHDN of $211.43 per share. For 2022, Mr. Carstanjen did not defer any of his RSUs.

(2) Mr. Blackwell and Ms. Adams each became an NEO in 2022.

2023 Proxy Statement

Nonqualified Deferred Compensation for Fiscal Year Ended December 31, 2022

Under the Deferral Plan, an account has been established and maintained for each participant, and each participant’s
account has been credited with all RSUs and any applicable dividend equivalents allocated to such participant. A
participant’s account under the Deferral Plan will be settled on the earlier of: (i) the participant’s separation from service
with the Company or (ii) the date fixed in such participant’s plan participation agreement.

The Nonqualified Deferred Compensation table above shows information about the Company’s legacy nonqualified
deferred compensation plan. In December 2019, this plan was frozen with respect to future contributions. Participants can
elect to receive their deferred compensation balance (i) upon termination of employment through a lump sum payment or
(ii) while employed by the Company provided that the initial distribution date is at least five (5) years from the initial
participation date, in which case distributions may be made on a monthly basis or in a lump sum.

2023 Proxy Statement

Potential Payments Upon Termination or Change of Control

POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE OF CONTROL

The Company has entered into certain agreements and maintains certain plans that will require the Company to provide
compensation to the NEOs in the event of a termination of employment. None of our compensation arrangements with our
NEOs provide for single trigger vesting or severance benefit upon a change in control (“CIC”) of the Company without a
related or subsequent qualifying termination of employment. The amount of compensation payable to each NEO in each
situation as of December 31, 2022 is listed in the table below.

Name

William C. Carstanjen

Involuntary or good reason termination

Change in control without termination

Death or Disability

Involuntary or good reason termination within 2 years CIC

William E. Mudd

Involuntary or good reason termination

Change in control without termination

Death or Disability

Involuntary or good reason termination within 2 years CIC

Marcia A. Dall

Involuntary or good reason termination

Change in control without termination

Death or Disability

Involuntary or good reason termination within 2 years CIC

Bradley K. Blackwell

Involuntary or good reason termination

Change in control without termination

Death or Disability

Involuntary or good reason termination within 2 years CIC

Maureen Adams

Involuntary or good reason termination

Change in control without termination

Death or Disability

Involuntary or good reason termination within 2 years CIC

Cash
Severance
Payment ($)

Acceleration &
Continuation
of Equity
Awards ($)(1)

Total Benefits ($)

10,880,284

54,440,054(4)

65,320,337

-0-

2,625,000(2)

10,880,284

-0-

54,440,054(5)

57,534,120(3)

-0-

57,065,054

68,414,404

5,092,787

32,974,411(4)

38,067,198

-0-

1,375,000(2)

6,330,287

-0-

32,974,411(5)

34,409,175(3)

-0-

34,349,411

40,739,462

2,679,969

1,750,922(4)

4,430,891

-0-

935,000(2)

3,572,469

-0-

1,750,922(5)

2,673,955(3)

-0-

2,685,922

6,246,424

1,668,033

1,222,488(4)

2,890,521

-0-

510,000(2)

2,223,033

1,555,161

-0-

460,000(2)

2,072,661

-0-

1,222,488(5)

1,567,965(3)

-0-

1,732,488

3,790,998

821,335(4)

2,376,496

-0-

821,335(5)

1,135,379(3)

-0-

1,281,335

3,208,040

(1) Represents the market value as of December 31, 2022 of stock awards accelerated or continued in each scenario. For purposes of

this disclosure, market value is determined using the December 31, 2022 closing price of CHDN of $211.43 per share.

(2) Represents the pro rata bonus for the year of death or disability based on the target bonus the executive was eligible to receive for

that year.

(3) Represents one hundred percent (100%) of all unvested RSU and PSU awards (based on to-date performance as of the termination

date) granted under the 2016 Omnibus Stock Incentive Plan and the ELTI.

2023 Proxy Statement

Potential Payments Upon Termination or Change of Control

(4) Represents (i) continued vesting of all unvested RSUs as of the termination date, plus (ii) continued vesting of all PSUs based on

performance through the entire performance period, pro-rated for the time the NEO was employed during that performance
period. For purposes of this table, all PSUs values are based on target performance.

(5) Represents (i) accelerated vesting of all unvested RSUs as of the termination date, plus (ii) continued vesting of all PSUs based on
performance through the entire performance period, pro-rated for the time the NEO was employed during that performance
period. For purposes of this table, all PSUs values are based on target performance.

Non-Solicit Provisions

The NEOs each entered into an Executive Change in Control, Severance and Indemnity Agreement (the “Change in Control
Agreements”) with the Company. Pursuant to each of these agreements, each NEO is subject to a two-year non-solicitation
period after the termination of their employment with the Company for any reason, during which they may not solicit any
employee of the Company to leave employment with the Company or solicit any customer of the Company for the purpose
of engaging in business with them that competes with the business engaged in by the Company.

Severance Benefits

The Change in Control Agreements, executed by the NEOs, provide for the following principal severance provisions upon
termination by the Company without cause or by the executive upon constructive termination or for good reason (as
defined in each agreement):

Mr. Carstanjen and Mr. Mudd. The Change in Control Agreement executed by Mr. Carstanjen and Mr. Mudd in 2018
provides that, upon termination by the Company without cause or by the executive upon constructive termination or for
good reason, the executive will be entitled to receive (a) an amount in cash equal to, in the case of Mr. Carstanjen, 2 times
and, in the case of Mr. Mudd, 1.5 times the sum of (x) the executive’s annual base salary and (y) the amount of the
executive’s annual target bonus for the year in which the executive was terminated, (b) a lump sum amount equal to the
prorated in-cycle bonus of executive’s target bonus for the year in which the executive’s termination of employment
occurs, (c) treatment of all equity-based awards per the terms of the applicable plan, award or agreement, and (d) a lump
sum cash payment equal to the total premiums for medical, dental and vision benefits for a three-month period.

Ms. Dall, Mr. Blackwell and Ms. Adams. The Change in Control Agreement executed by Ms. Dall in 2020, and Mr. Blackwell
and Ms. Adams in 2022, provides that, upon termination by the Company without cause or by the executive upon
constructive termination or for good reason, the executive will be entitled to receive (a) an amount in cash equal to 1.5
times the sum of (x) the executive’s annual base salary and (y) the amount of the executive’s annual target bonus for the
year in which the executive was terminated, (b) treatment of all equity-based awards per the terms of the applicable plan,
award or agreement, and (c) a lump sum cash payment equal to the total premiums for medical, dental and vision benefits
for a three-month period.

Change in Control Benefits. The current agreements for the NEOs also provide for the following change in control
provisions: if the executive is terminated within two years following a change in control, the NEO will receive severance as
provided above, except that the salary and bonus severance multiple shall in each case be 2x.

In the event that any payments to any of the NEOs are subject to the excise tax imposed by Section 4999 of the Code, such
payments shall be reduced to one dollar ($1) below the maximum amount of payments that will not be subject to such tax;
provided, however, that the foregoing limitation shall not apply in the event the total payments to the NEO, on an after-tax
basis, would exceed the after-tax benefits to the NEO if such limitation applied. The NEO shall bear the expense of any and
all excise taxes due on any payments that are deemed to be “excess parachute payments” under Section 280G of the Code.

2023 Proxy Statement

Pay Ratio

PAY RATIO

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the
following disclosure about the relationship of the annual total compensation of our employees to the annual total
compensation of Mr. Carstanjen, our Chief Executive Officer. To understand this disclosure, we think it is important to give
context to our operations. Our business is seasonal and relies heavily on seasonal, part-time and hourly workers. In
addition, our gaming business operation also employs many part time hourly employees. In total, approximately 76.2% of
our workforce consists of hourly employees.

We strive to create a compensation program that is competitive in terms of both the position and the geographic location
in which the employee is located. Accordingly, our pay structures vary among employees based on position and geographic
location.

Identification of Median Employee

For 2022, we elected to use December 31, 2022 as the date on which to determine our median employee. This date was
chosen because it followed the closing and administrative processing of the 2022 fall race meets at Churchill Downs
Racetrack, so seasonal employees utilized only during the race meet (i.e., not during the majority of the year) and not
viewed as representative of our general employee base were no longer on the payroll. As of December 31, 2022, we had
approximately 6,259 employees. For purposes of identifying the median employee, we ran a report for all year-to-date
taxable compensation for employees as of the selection date, and sorted by the total compensation.

Using this methodology, we determined our median employee was a full-time, hourly employee with an annual total
compensation of $21,988. We used base cash compensation as our compensation measure as it is the principal form of
compensation delivered to all of our employees and annualized compensation for full-time and part-time employees hired
during 2022 who did not work an entire year. In determining the annual total compensation of the median employee, we
calculated such employee’s compensation in accordance with Item 402(c)(2)(x) of Regulation S-K as required pursuant to
SEC executive compensation disclosure rules. This calculation is the same calculation used to determine total compensation
for purposes of the 2022 Summary Compensation Table with respect to each of the NEOs.

Ratio (2022)

Median Annual Total Compensation (excluding CEO)

CEO Annual Total Compensation

Pay Ratio

21,988

$12,093,113

550 to 1

SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various
methodologies and assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio
reported by other companies.

2023 Proxy Statement

Pay Versus Performance

PAY VERSUS PERFORMANCE

Pursuant to Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K,
the Pay Versus Performance Table (set forth below) is required to include “Compensation Actually Paid,” as calculated per SEC
disclosure rules, to the Company’s principal executive officer (“PEO”) and the Company’s non-PEO NEOs, as noted below.
“Compensation Actually Paid” represents a new required calculation of compensation that differs significantly from the Summary
Compensation Table calculation of compensation, the NEO’s realized or earned compensation, as well as from the way in which
the Compensation Committee views annual compensation decisions, as discussed in the CD&A. The amounts in the table below
are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by NEOs, including with
respect to RSUs and PSUs which remain subject to forfeiture if the vesting conditions are not satisfied.

Summary
Compensation
Table Total
for PEO ($)(2)

Compensation
Actually Paid
to PEO ($)(3)

Average
Summary
Compensation
Table Total for
Non-PEO
NEOs ($)(2)

Average
Compensation
Actually Paid
to Non-PEO
NEOs ($)(3)

12,093,113

6,375,065

3,849,991

2,722,507

13,755,283

43,164,399

4,490,694

10,733,870

10,491,139

40,031,657

3,304,200

9,720,189

Year(1)

2022

2021

2020

Value of Initial Fixed $100
Investment Based On:(4)

Total
Shareholder
Return
($)(4)

155.52

176.65

142.44

Peer Group
Total
Shareholder
Return
($)(5)

82.47

115.26

118.67

Net Income
(Loss)
(in millions)
($)

439.4

249.1

(81.9)

Adjusted
EBITDA
(in millions)(6)

763.6

627.0

286.5

(1) Mr. Carstanjen served as the Company’s PEO for the entirety of 2020, 2021 and 2022 and the Company’s other NEOs

for the applicable years were as follows:

–
–
–

2022: William E. Mudd; Marcia A. Dall; Bradley K. Blackwell, and Maureen Adams
2021: William E. Mudd; Marcia A. Dall; and Austin Miller
2020: William E. Mudd; Marcia A. Dall; and Austin Miller

(2) Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table
for the applicable year in the case of Mr. Carstanjen and (ii) the average of the total compensation reported in the
Summary Compensation Table for the applicable year for the Company’s NEOs reported for the applicable year other
than Mr. Carstanjen.

(3) To calculate “Compensation Actually Paid” under SEC disclosure rules, adjustments were made to the amounts

reported in the Summary Compensation Table for the applicable year. Reconciliations of the adjustments for
Mr. Carstanjen and for the average of the other NEOs are set forth in the tables below. Based on the required
methodology for calculating “Compensation Actually Paid” under SEC disclosure rules, “Compensation Actually Paid”
fluctuates most significantly based on changes in the Company’s stock price during the vesting period of the award.
Accordingly, the values shown as “Compensation Actually Paid” reflect the increase or decrease in the value of such
equity awards based on our stock price performance and, for the years prior to vesting, do not reflect compensation
realized or earned by the NEO. Accordingly, the “Compensation Actually Paid” reflected below includes values for
equity awards that may not be earned due to failure to satisfy the vesting conditions or may be earned at levels that
differ from the amounts reported below based on the stock price as of the vesting date. The assumptions used to
calculate the fair value for purposes of determining the “Compensation Actually Paid” are consistent with the
methodology used for calculating the grant date fair value for financial reporting purposes.

Summary Compensation Table - Total
Compensation

- Grant Date Fair Value of Stock Awards
Granted in Fiscal Year

PEO
($)

2021

2022

Other NEOs Average
($)

2020

2022

2021

2020

12,093,113 13,755,283 10,491,139

3,849,991

4,490,694

3,304,200

(6,538,424)

(6,986,731)

(7,057,084)

(1,808,263)

(1,976,295)

(1,889,018)

2023 Proxy Statement

Pay Versus Performance

PEO
($)

2021

2022

Other NEOs Average
($)

2020

2022

2021

2020

5,487,230

6,418,135

7,375,924

1,352,052

1,598,600 1,737,326

(7,286,930) 20,661,694 21,626,016 (1,149,343)

4,333,577 4,607,234

1,039,698

1,257,372

1,341,294

204,821

355,672

359,033

1,580,378

8,058,646

6,254,368

273,249

1,931,622 1,601,414

N/A

+ Fair Value at Fiscal Year-End of
Outstanding and Unvested Stock Awards
Granted in Fiscal Year

+/- Change in Fair Value of Outstanding
and Unvested Stock Awards Granted in
Prior Fiscal Years

+ Fair Value at Vesting of Stock Awards
Granted in Fiscal Year That Vested During
Fiscal Year

+/- Change in Fair Value as of Vesting Date
of Stock Awards Granted in Prior Fiscal
Years For Which Applicable Vesting
Conditions Were Satisfied During Fiscal
Year

- Fair Value as of Prior Fiscal Year-End of
Stock Awards Granted in Prior Fiscal Years
That Failed to Meet Applicable Vesting
Conditions During Fiscal Year

= Compensation Actually Paid

6,375,065 43,164,399 40,031,657

2,722,507 10,733,870 9,720,189

(4) Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2019. Historic stock price

performance is not necessarily indicative of future stock price performance.

(5) The TSR Peer Group consists of the following peer group, which represents the same peer group used for our
competitive compensation analysis, as described in “Factors Used to Evaluate Pay Decisions” in the CD&A.

–

For 2021 and 2022, the peer group included Aristocrat Leisure Limited (ALL); Boyd Gaming Corporation (BYD);
Caesars Entertainment, Inc. (CZR); DraftKings Inc. (DKNG); Flutter Entertainment PLC (FLTR); Gaming and Leisure
Properties Inc. (GLPI); Madison Square Garden Entertainment Corp (MSGE); MGM Resorts International (MGM);
PENN Entertainment, Inc. (PENN); Red Rock Resorts Inc. (RRR); Light & Wonder, Inc. (LNW); and Wynn Resorts,
Limited (WYNN).
For 2020, the peer group included: Aristocrat Leisure Limited (ALL); Boyd Gaming Corporation (BYD); Caesars
Entertainment Corp. (CZR); Eldorado Resorts Inc. (ERI); Flutter Entertainment PLC (FLTR); Gaming and Leisure
Properties Inc. (GLPI); Madison Square Garden Company (MSG); MGM Resorts International (MGM); PENN
National Gaming, Inc. (PENN); Red Rock Resorts Inc. (RRR); Scientific Games Corp (SGMS); and Wynn Resorts,
Limited (WYNN). The TSR reflected for the TSR Peer Group for 2020 does not include returns for ERI or MSG due
to trading information not being available for such companies after each ticker symbol ceasing to be traded.

(6) As noted in the CD&A, Adjusted EBITDA is viewed as a core driver of the Company’s performance and shareholder

value creation and, accordingly, the Compensation Committee utilized Adjusted EBITDA as elements in both the
Company’s Executive Annual Incentive Plan and Executive Long-Term Incentive Plan. Adjusted EBITDA represents
earnings before interest, taxes, depreciation and amortization, as further adjusted as described in Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Form 10-K for the year
ended December 31, 2022.G

Relationship Between Pay and Performance

We believe the “Compensation Actually Paid” in each of the years reported above and over the multi-year cumulative
period are reflective of the Compensation Committee’s emphasis on “pay-for-performance” as the “Compensation Actually
Paid” fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement
against pre-established performance goals under our annual incentive program and PSU awards, including our Adjusted
EBITDA performance.

2023 Proxy Statement

Pay Versus Performance

Because of the leverage of our executive compensation program towards long-term incentives through grants of PSUs and
RSUs, the “Compensation Actually Paid” is most significantly impacted by changes in our stock price over the vesting period
of the awards. In addition, this Pay Versus Performance disclosure is significantly impacted by the 7-Year Grants (as defined
below). As further described in the Company’s Definitive Proxy Statement, filed with the SEC on March 13, 2019, on
October 30, 2018, the Compensation Committee granted special, meaningful, stock unit awards (the “7-Year Grants”) to
Messrs. Carstanjen and Mudd in the form of PSUs and RSUs. The 7-Year Grants were awarded to Messrs. Carstanjen and
Mudd in recognition of the leadership and unique skills of these executives and to strengthen the retentive aspect of the
Company’s executive compensation program in light of the expectation that there would be increased solicitation of
Messrs. Carstanjen and Mudd for alternative employment opportunities. The 7-Year Grants were designed around three
key elements: (1) inclusion of robust performance goals designed to reinforce the Company’s pay for performance
philosophy, with no payout under the PSUs unless the Company’s TSR outperformed the median of the Russell 2000; (2)
linkage to the Company’s share price appreciation and shareholder interests through a stock-settled award with 67% of the
PSUs vesting based on our relative TSR performance and the value of the award subject to continued fluctuations in the
Company’s stock price over the 7-year vesting period; and (3) appropriate leverage to provide a meaningful compensation
opportunity while not promoting excessive risk-taking. Because the 7-Year Grants are not eligible for full vesting until the
seventh anniversary of the grant date, the Pay Versus Performance disclosure will be impacted by stock price fluctuations
over the course of the term of the award.

Sixty-seven percent (67%) of the 7-Year Grants were in the form of PSUs, with vesting based on the Company’s relative TSR
performance versus the Russell 2000 over the three-year performance period (October 30, 2018 through October 29, 2021) and
vesting occurring thereafter in twenty-five percent (25%) annual increments over four years based on the executive’s continued
service through such date, beginning on the fourth anniversary of the grant date, totaling seven years to be fully vested.

The relationship between compensation paid and the pay of our NEOs is further explained below:

Relationship Between “Compensation Actually Paid” to the PEO and Average Other NEOs and the Company’s Cumulative
TSR—As calculated in accordance with the SEC disclosure rules, Mr. Carstanjen’s “Compensation Actually Paid” was
impacted by the effect of the increase in 2020 and 2021, and the slight decline in 2022, in the Company’s stock price on
Mr. Carstanjen’s 7-Year Grant. Similarly, the other NEOs’ “Compensation Actually Paid” was impacted primarily by the
effect of the change in stock price on Mr. Mudd’s 7-Year Grant. This relationship is further illustrated in the following
chart which shows the alignment between our “Compensation Actually Paid” and TSR performance.

Compensa(cid:2)on Actually Paid vs Company Shareholder Return

d
a
P
y
l
l

a
u
t
c
A
n
o
(cid:2)
a
s
n
e
p
m
o
C

$50,000,000

$45,000,000

$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$200

$190

$180

$170

$160

$150

$140

$130

$120

$110

$100

T
o
t
a

S
h
a
r
e
h
o
d
e
r
R
e
t
u
r
n

2020

2021

2022

Actually paid to PEO

Actually paid to non PEO NEOs

CHDN TSR

2023 Proxy Statement

Pay Versus Performance

Relationship Between “Compensation Actually Paid” to the PEO and Average Other NEOs and the Company’s Net
Income and Adjusted EBITDA—The “Compensation Actually Paid” to our NEOs is impacted by net income through the
use of Adjusted EBITDA as a component in both the Company’s Executive Annual Incentive Plan and Executive Long-
Term Incentive Plan. The relationship between “Compensation Actually Paid” and the Company’s net income and
Adjusted EBITDA performance is further illustrated in the following chart:

Compensa(cid:2)on Actually Paid vs Annual Net Income

d
a
P
y
l
l

a
u
t
c
A
n
o
(cid:2)
a
s
n
e
p
m
o
C

d
a
P
y
l
l

a
u
t
c
A
n
o
(cid:2)
a
s
n
e
p
m
o
C

$50,000,000

$45,000,000

$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$50,000,000

$45,000,000

$40,000,000

$35,000,000

$30,000,000

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$500.00

$400.00

$300.00

$200.00

$100.00

$(100.00)

A
n
n
u
a

N
e
t

n
c
o
m
e
(
i
n
m

i
l
l
i

o
n
s
)

$950.0

$850.0

$750.0

$650.0

$550.0

$450.0

$350.0

$250.0

$150.0

A
d
u
s
t
e
d
E
B
I
T
D
A
(
i
n
m

i
l
l
i

o
n
s
)

2020

2021

2022

Actually paid to PEO

Actually paid to non PEO NEOs

Net Income

Compensa(cid:2)on Actually Paid vs Adjusted EBITDA

2020
Actually paid to PEO

2021

2022

Actually paid to non PEO NEOs

Adjusted EBITDA

2023 Proxy Statement

Pay Versus Performance

Relationship Between the Company’s TSR and the Peer Group TSR—Over the 2020 to 2022 time period, the Company’s
TSR has consistently outperformed the Peer Group TSR each year, as illustrated in the following chart:

Company and Selected Peer Group Shareholder Return

n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S

a
t
o
T

$190.00

$170.00

$150.00

$130.00

$110.00

$90.00

$70.00

$50.00

2020

2021

2022

CHDN TSR

Selected Peer Group TSR

Financial Performance Measures

As described in greater detail in the CD&A, our approach to executive compensation is designed to (i) attract and retain
executives with the skills and experience needed to successfully grow the Company and create value for shareholders;
(ii) create an entrepreneurial culture and mindset by de-emphasizing fixed pay (primarily salary) and focusing a significant
percentage of compensation on at-risk pay elements (annual and long-term incentives); and (iii) motivate and reward
executives for achieving exceptional performance supportive of creating value for shareholders over the long-term.
Because of the leverage of our executive compensation program towards long-term incentives through grants of PSUs and
RSUs, our executive compensation program is designed to be strongly aligned with the interests of our shareholders and
our executive compensation program is most significantly impacted by changes in our stock price.

Our executive compensation program is also designed so that compensation is tied to our performance against
pre-established financial measures. The most important financial measures used by the Company to link “Compensation
Actually Paid” (as defined by SEC rules) to the Company’s NEOs for the most recently completed fiscal year to the
Company’s performance are:

Adjusted EBITDA

Š Multi-Year Cumulative Adjusted EBITDA

3-Year Cumulative Cash Flow

Š Multi-Year Relative Total Shareholder Return

2023 Proxy Statement

EQUITY COMPENSATION PLAN INFORMATION(1)

Equity Compensation Plan Information

Plan Category

Equity compensation plans approved by security
holders(2)

Equity compensation plans not approved by security
holders

Total

(a)
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights

(b)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights

729,990(3)(4)

-0-

729,990

-0-

(c)
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a))

1,650,970(5)

-0-

1,650,970

(1) This table provides information, as of December 31, 2022, about CHDN Common Stock that may be issued upon the

exercise of options and settlement of other equity awards under all compensation plans under which equity securities
are reserved for issuance.

(2) The equity compensation plans of the Company which have been approved by the shareholders of the Company and
pursuant to which equity securities are authorized for issuance are the Churchill Downs Incorporated 2000 Employee
Stock Purchase Plan (“Stock Purchase Plan”) and the Churchill Downs Incorporated 2016 Omnibus Stock Incentive Plan
(“2016 Plan”).

(3)

Includes 58,245 PSUs and 557,029 RSUs (including the 2018 PSUs granted to Messrs. Carstanjen and Mudd which
remain subject to time-based vesting) that were outstanding on December 31, 2022 under the 2016 Plan. For purposes
of this table, we have included the number of shares issuable under outstanding PSUs assuming performance targets
are achieved. Please see the CD&A for further information regarding the 2022 PSUs, including performance metrics
applicable to such awards.

(4) Because each participant in the Stock Purchase Plan has one option each plan year and that option consists of the
number of shares which can be purchased, through exercise, at the end of the plan year using compensation
deductions made throughout the plan year, no outstanding options, warrants or rights for a specific number of the
Company’s securities to be issued upon exercise existed at December 31, 2022 and, therefore, none are included in
this total for the Stock Purchase Plan.

(5) Of this total, as of December 31, 2022, 537,119 shares of Common Stock of the Company remained available for future
issuance under the Stock Purchase Plan and 1,113,851 shares of Common Stock of the Company remained available
for future issuance under the 2016 Plan. Stock awards under the 2016 Plan will be counted against the maximum
number of shares as to which stock awards may be granted on a ratio of 1-to-1.

2023 Proxy Statement

Certain Relationships and Related Transactions

CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

The Company has adopted written policies and procedures for identifying and approving or ratifying related person
transactions. The policies and procedures cover all related person transactions required to be disclosed under Item 404
(a) of Regulation S-K. The Audit Committee is responsible for applying the policies and procedures. In evaluating related
person transactions, the Audit Committee considers all factors it deems appropriate, including without limitation, whether
the related person transaction is on terms no less favorable than terms generally available to an unaffiliated third party
under the same or similar circumstances, the extent of the related person’s interest in the transaction, and whether
products or services of a similar nature, quantity, or quality are readily available from alternative sources.

Directors of the Company may from time to time own or have interests in horses racing at the Company’s tracks. All such
races are conducted, as applicable, under the regulations of the Kentucky Horse Racing Commission, the Louisiana State
Racing Commission, the Ohio State Racing Commission, the Maryland Racing Commission, the Virginia Racing Commission,
and the Pennsylvania State Horse Racing Commission, and no director receives any extra or special benefit with regard to
having his or her horses selected to run in races or in connection with the actual running of races.

In its ordinary course of business, the Company may enter into transactions with certain of its officers and directors for the
sale of personal seat licenses and suite accommodations at its racetracks, and tickets for its live racing events. The Company
believes that each such transaction has been on terms no less favorable for the Company than could have been obtained in
a transaction with a third party and no such person received any extra or special benefit in connection with such
transactions.

On February 11, 2021, Hunter Rankin was hired as the Senior Director of Racing for the Company to focus on supporting
and enhancing the Company’s commitment, position and role in the U.S. thoroughbred racing and breeding industry,
including implementing the standards and processes outlined in the Horse Racing Integrity and Safety Act across all of the
Company’s racing properties and representing the Company’s interests as an advocate for important issues and policies
within the racing and breeding industry. Hunter Rankin is the son of Alex Rankin, Chairman of the Board of the Company
and a director of the Company since 2008. Many candidates were considered for the position and Hunter Rankin was
selected based on his skill set and prior experience in the racing and breeding industries, his familiarity with the recently
enacted Horse Racing Integrity and Safety Act, and the breadth of relationships he has developed with key stakeholders
within the racing and breeding industries. At the time of his departure from the Company in August 2022, Hunter Rankin’s
annual base salary was $175,049.00 and he was entitled to an annual bonus and restricted stock awards at the discretion of
the Company, as well as employee benefits consistent with employees in similar positions with the Company.

Other than as described above, since January 1, 2022, no transaction was identified as a related party transaction.

2023 Proxy Statement

Delinquent Section 16(a) Reports

DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Exchange Act requires that the Company’s directors, executive officers and persons who beneficially
own more than ten percent (10%) of the Company’s Common Stock file certain reports with the SEC with regard to their
beneficial ownership of the Common Stock. The Company is required to disclose in this Proxy Statement any failure to file
or late filings of such reports. Based solely on our review of the forms filed with the SEC or written representations from
certain reporting persons received by us, we believe that our directors, officers and persons who own more than ten
percent (10%) of the Company’s Common Stock have complied with all applicable filing requirements, other than with
respect to the following late filings of Forms 3 on behalf of Bradley K. Blackwell and Maureen Adams, due to the Company’s
inability to timely obtain EDGAR access filing codes.

2023 Proxy Statement

Multiple Shareholders Sharing the Same Address

MULTIPLE SHAREHOLDERS SHARING THE SAME
ADDRESS

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for
proxy statements with respect to two or more shareholders sharing the same address by delivering a single Proxy
Statement or Notice addressed to those shareholders. This process, which is commonly referred to as “householding,”
potentially means extra convenience for shareholders and cost savings for companies.

At this time, one or more brokers with accountholders who are Company shareholders will be “householding” our proxy
materials. A single Proxy Statement or Notice will be delivered to multiple shareholders sharing an address unless contrary
instructions have been received from the affected shareholder. Once you have received notice from your broker that they
will be “householding” communications to your address, “householding” will continue until you are notified otherwise or
until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to
receive a separate Proxy Statement or Notice, please notify your broker. You may direct your written request for a copy of
the Proxy Statement or Notice to Churchill Downs Incorporated, Attn: Paula Chumbley, 600 N. Hurstbourne Parkway, Ste.
400, Louisville, Kentucky 40222, or at (502) 636-4400. If your broker is not currently “householding” (i.e., you received
multiple copies of the Company’s Proxy Statement or Notice), and you would like to request delivery of a single copy, you
should contact your broker.

2023 Proxy Statement

Proposals by Shareholders

PROPOSALS BY SHAREHOLDERS

Any shareholder proposal that may be included in the Board of Directors’ Proxy Statement and proxy for presentation at
the annual meeting of shareholders to be held in 2024 must be received by the Company at the principal executive office at
600 N. Hurstbourne Parkway, Ste. 400, Louisville, Kentucky 40222, Attention of the Secretary, no later than November 16,
2023. Pursuant to the Company’s Amended and Restated Bylaws, proposals of shareholders intended to be presented at
the Company’s 2024 annual meeting of shareholders, but not included in the Proxy Statement, must be received by the
Company at the principal executive offices of the Company not less than 90 nor more than 120 days prior to the anniversary
date of the immediately preceding annual meeting of shareholders. Accordingly, any shareholder proposals intended to be
presented at the 2024 annual meeting of shareholders of the Company must be received in writing by the Company at its
principal executive offices no later than January 26, 2024, and no sooner than December 27, 2023 and otherwise comply
with the requirements set forth in the Company’s Amended and Restated Bylaws. Any proposal submitted before or after
those dates will be considered untimely, and the Chairman shall declare that the business is not properly brought before
the meeting and such business shall not be transacted at the annual meeting.

By Order of the Board of Directors

R. ALEX RANKIN
Chairman

BRADLEY K. BLACKWELL
Executive Vice President and
General Counsel,
Secretary

Louisville, Kentucky
March 16, 2023

PLEASE VOTE BY TELEPHONE OR OVER THE INTERNET
IF YOU CANNOT ATTEND VIRTUALLY

2023 Proxy Statement

APPENDIX A

Reconciliation of Comprehensive Income (Loss) to Adjusted EBITDA

(in millions)

Net income and comprehensive income attributable to Churchill Downs
Incorporated

Net loss attributable to noncontrolling interest

Net income

Loss from discontinued operations, net of tax

Income from continuing operations, net of tax

Additions:

Depreciation and amortization

Interest expense

Income tax provision

EBITDA

Adjustments to EBITDA:

Selling, general and administrative:

Stock-based compensation expense

Legal reserves

Other charges

Pre-opening expense and other expense

Other income, expense:

Interest, depreciation and amortization expense related to equity investments

Changes in fair value of Rivers Des Plaines’ interest rate swaps

Rivers Des Plaines’ legal reserves and transactions costs

Other charges and recoveries, net

Gain on Calder land sale

Transaction expense, net

Asset impairments

Total adjustments to EBITDA

Adjusted EBITDA

Appendix A

Years Ended December 31,

2022

2021

Change

$ 439.4

$249.1

$ 190.3

—

439.4

249.1

190.3

—

439.4

249.1

190.3

113.7

147.3

169.4

103.2

84.7

94.5

10.5

62.6

74.9

$ 869.8

$531.5

$ 338.3

$ 31.8

$ 27.8

3.8

7.4

13.2

42.8

(12.6)

0.6

1.0

(274.6)

42.1

38.3

(106.2)

—

0.2

5.8

41.5

(12.9)

9.9

—

7.9

15.3

95.5

4.0

3.8

7.2

7.4

1.3

0.3

(9.3)

1.0

(274.6)

34.2

23.0

(201.7)

$ 763.6

$627.0

$ 136.6

2023 Proxy Statement

A-1

Appendix A

(in millions)

Comprehensive income

Foreign currency translation, net of tax

Net change in pension benefits, net of tax

Net income

Income from discontinued operations, net of tax

Income from continuing operations, net of tax

Additions - continuing operations:

Depreciation and amortization

Interest expense

Loss on extinguishment of debt

Income tax (benefit) provision

EBITDA

Adjustments to EBITDA - continuing operations:

Selling, general and administrative:

Stock-based compensation expense

Other charges

Pre-opening expense

Other income, expense:

Interest, depreciation and amortization expense related to equity investments

Other charges and recoveries, net

Impairment of tangible and other intangible assets

Gain on Calder land sale

Transaction expense, net

Total adjustments to EBITDA

Adjusted EBITDA

Year Ended December 31,
2017

$140.4

0.1

—

140.5

(18.1)

122.4

—

56.0

49.3

20.7

(19.9)

$228.5

16.0

0.5

—

16.7

—

21.7

—

2.3

57.7

$286.2

A-2

2023 Proxy Statement

2022 Annual Report on Form 10-K

☒

☐

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiff scal year ended December 31, 2022
OR

TRARR NSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period frff om

Commission fiff le number 001-33998

Churchill Downs Incorporated

(Exact name of registrant as specififf ed in its charter)

Kentuckykk
(State or other jurisdiction of incorporation or organization)

600 North Hurstbourne Parkwk ay, Suite 400
Louisville, Kentuckykk
(Address of principal executive offff iff ces)

61-0156015
(IRS Employer Identififf cation No.)

40222
(Zip Code)

(502) 636-4400
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

,,
Common Stock, No Par Value
(Title of each class registered)

Trading Symbol(s)
CHDN

The Nasdaq Stock Market LLC
(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defiff ned in RulRR e 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to fiff le reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has fiff led all reports required to be fiff led by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or forff
such shorter period that the registrant was required to fiff le such reports), and (2) has been subject to
such fiff ling requirements forff

the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically everyr
405 of Regulation S-T (§ 232.405 of this chapta er) during the preceding 12 months (or forff
submit such fiff les). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated fiff ler, an accelerated fiff ler, a non-accelerated fiff ler, a smaller reporting company,
or an emerging growth company. See the defiff nitions of "large accelerated fiff ler," "accelerated fiff ler," "smaller reporting company," and "emerging
growth company" in RulRR e 12b-2 of the Exchange Act.

Interactive Data File required to be submitted pursuant to RulRR e
such shorter period that the registrant was required to

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Large accelerated fiff ler

Non-accelerated fiff ler

☒

☐

Accelerated fiff ler

Smaller reporting company

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised fiff nancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by a check mark whether the registrant has fiff led a report on and attestation to its management's assessment of the effff eff ctiveness of its
internal control over fiff nancial reporting under Section 404(b) of the Sarbar nes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
fiff rm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the fiff nancial statements of the registrant included
in the fiff ling reflff ect the correction of an error to previously issued fiff nancial statements. ☐ Yes ☐ No
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Yes ☐ No
Indicate by check mark whether the Registrant is a shell company (as defiff ned in RulRR e 12b-2 of the Exchange Act). Yes ☐ No ☒
As of Februarr
sale price forff
$6,381,050,626.

ryr 15, 2023, 37,382,489 shares of the Registrant’s Common Stock were outstanding. As of June 30, 2022 (based upon the closing
such date on the Nasdaq Global Select Market), the aggregate market value of the shares held by non-affff iff liates of the Registrant was

Portions of the Registrant’s Proxy Statement forff
herein in response to Items 10, 11, 12, 13 and 14 of Part III of Form 10-K.

its Annual Meeting of Shareholders to be held on April 25, 2023 are incorpor

ated by refeff rence

CHURCHILL DOWNS INCORPORARR TED
INDEX TO ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2022

Part I

Business

Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staffff Comments
Item 2.

p
Properties

Item 3.

Item 4.

Item 5.

Item 6.

Item 7.

g
Legal Proceedings

y
Mine Safeff ty Disclosures

Part II
y
Market forff Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities

Reserved

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.

Financial Statements and Supplementaryrr Data

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9.

g
Item 9A. Controls and Procedures
Item 9B. Other Inforff mation
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
g

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

Directors, Executive Offff iff cers and Corpor

Part III

ate Governance

Executive Compensation

Security Ownership of Certain Benefiff cial Owners and Management and Related Shareholder Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accountant Fees and Services

Item 15.

Exhibit and Financial Statement Schedule

Part IV

Exhibit Index

Item 16.

Form 10-K Summaryrry

Signaturt es

Schedule II—Valuation and Qualifyiff ng Accounts

y g

Cautionary Statement Regarding Forward-Looking Inforff mation

This Annual Report on Form 10-K (“Report”) contains various “forff ward-looking statements” within the meaning of the “safeff
harbor
” provisions of the Private Securities Litigation Reforff m Act of 1995. Forward-looking statements are typically identififf ed
r
by the use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,”
“project,” “seek,” “should,” “will,” and similar words or similar expressions (or negative versions of such words or
expressions).

ions in the general labor

Although we believe that the expectations reflff ected in such forff ward-looking statements are reasonabla e, we can give no
assurance that such expectations will prove to be correct.
l
Important faff ctors, among others, that may materially affff eff ct actuat
results or outcomes include the folff
lowing: the occurrence of extraordinaryrr events, such as terrorist attacks, public health threats,
civil unrest, and inclement weather, including as a result of climate change; the effff eff ct of economic conditions on our
spending or our access to credit , including the impact of inflff ation; additional or
consumers’ confiff dence and discretionaryrr
increased taxes and feff es; the impact of the novel coronavirusrr
(COVID-19) pandemic, including the emergence of variant
strains, and related economic matters on our results of operations, fiff nancial conditions and prospects; lack of confiff dence in the
integrity of our core businesses or any deterioration in our reputation; loss of key or highly skilled personnel, as well as
disrupt
market; the impact of signififf cant competition, and the expectation the competition levels will
rr
increase; changes in consumer prefeff rences, attendance, wagering, and sponsorships; risks associated with equity investments,
strategic alliances and other third-party agreements; inabia lity to respond to rapia d technological changes in a timely manner;
ing or other technology
concentration and evolution of slot machine and historical racing machine (HRM) manufaff cturt
conditions that could impose additional costs; faff ilure to enter into or maintain agreements with industryrr constituet nts, including
horsemen and other racetracks; inabia lity to successfulff
our TwinSpires Sports
and Casino business and effff eff ctively compete; online security risk, including cyber-security breaches, or loss or misuse of our
stored inforff mation as a result of a breach; reliance on our technology services and catastrophic events and system faff ilures
ly realize the benefiff ts of acquisitions, divestiturt es,
rr
disrupt
development of new venues or the expansion of existing faff cilities on time, on budget, or as planned; diffff iff culty in integrating
recent or futff urt e acquisitions into our operations; cost overruns
and other uncertainties associated with the development of new
venues and the expansion of existing faff cilities; general risks related to real estate ownership and signififf cant expenditurt es,
litigation related to injuries occurring at our racetracks;
including risks related to environmental liabia lities; personal injuryrr
compliance with the Foreign Corrupt
icabla e anti-money laundering
rr
regulations; payment-related risks, such as risk associated with frff audulent credit card or debit card use; work stoppages and
labor
problems; risks related to pending or futff urt e legal proceedings and other actions; highly regulated operations and changes
a
in the regulatoryrr environment could adversely affff eff ct our business; restrictions in our debt faff cilities limiting our flff exibility to
operate our business; faff ilure to comply with the fiff nancial ratios and other covenants in our debt faff cilities and other
indebtedness; increases to interest rates (due to inflff ation or otherwise), disrupt
ion in the credit markets or changes to our credit
ratings may adversely affff eff ct our business; increase in our insurance costs, or inabia lity to obtain similar insurance coverage in
damages sustained at our properties in the event of
the futff urt e, and any inabia lity to recover under our insurance policies forff
inclement weather and casualty events; and other faff ctors described in Item 1A. Risk Factors, of this Report and in other fiff lings
we make with the Securities and Exchange Commission.

Practices Act or other similar laws and regulations, or appl

ly focff us on market access and retail operations forff

ing our operations; inabia lity to identifyff

and /or complete, or fulff

We do not undertake any obligation to update or revise any forff ward-looking statements, whether as a result of new inforff mation,
futff urt e events or otherwise, except as required by law.

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PART I

ITEM 1.

Overview

BUSINESS

ated ("CDI" or the "Company") has been creating extraordinaryrr entertainment experiences forff

nearly
Churchill Downs Incorpor
Headquartered in Louisville,
150 years, beginning with the Company’s most iconic and enduring asset, the Kentuct ky Derby.
Kentuctt ky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the
TwinSpires horse racing online wagering business and the operation and development of regional casino gaming properties.
Business Segments

these segments is set forff

The Company manages its business through three reportabla e segments: Live and Historical Racing, TwinSpires, and Gaming.
Financial inforff mation about
th in Part II, Item 8. Financial Statements and Supplementaryrr Data,
contained within this Report. In the fiff rst quarter of 2022, we updated our operating segments to reflff ect the internal management
reporting used by our chief operating decision maker to evaluate results of operations and to assess perforff mance and allocate
resources. During the fiff rst quarter of 2022, our chief operating decision maker decided to include the results of our United Tote
business in the TwinSpires segment as we evolve our strategy to integrate the United Tote offff eff ring with TwinSpires Horse
Racing, which we believe will create additional business-to-business revenue opportuni
ties. The prior year results in the
accompanying Consolidated Statements of Comprehensive Income (Loss) conforff m to this presentation. Further discussion of
segment fiff nancial inforff mation, and our planned investments in segment properties, is set forff
th in Part II, Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations contained within this Report.

th quarter of 2022, we updated our operating segments to reflff ect the geographi

During the four
es in which we operate. This
change is consistent with the internal management reporting used by our chief operating decision maker to evaluate results of
operations and to assess perforff mance and allocate resources. Our internal management reporting changed primarily due to the
continued growth of our business, which resulted in our chief operating decision maker's desire to review the results of the
Company on a geographi
cal basis within each reportabla e segment. The commentaryrr within Management’s Discussion and
Analysis has been updated to conforff m to this change.

Live and HiHH sii tortt

ical Racinii g

The Live and Historical Racing segment includes live and historical pari-mutuet
Churchill Downs Racetrack and our historical racing properties in Kentuct ky, Virginia, and New Hampshire.

l racing related revenue and expenses at

Our Live and Historical Racing properties earn commissions primarily frff om pari-mutuet
l wagering on live and historical races,
simulcast feff es earned frff om other wagering sites, feff es frff om racing event-related services including admissions, personal seat
licenses, sponsorships, television rights, and other miscellaneous services, and revenue frff om food

and beverage services.

ChurCC

chill Downs Racetrtt ack

Churchill Downs Racetrack is in Louisville, Kentuctt ky and is an internationally known thoroughbred racing operation best
known as the home of our iconic flff agship event, the Kentuctt ky Derby.
r We have conducted thoroughbred racing continuously at
is the longest continuously held annual sporting event in the U.S.
Churchill Downs Racetrack since 1875. The Kentuct ky Derbyr
3-year-old thoroughbreds known as the Triple Crown. The demographi
and is the fiff rst race of the annual series of races forff
c
ng naturt e of this iconic event are attractive to sponsors and
profiff le of our guests, global television viewership and long-runni
rr
corpor

ate partners, especially those with luxuryrr and/or marquee brands.

We conducted 65 live race days in 2020, 71 live race days in 2021 and 76 live race days in 2022.
conducting up to 79 live race days.

In 2023, we anticipate

f track, a stabla ing area, and a
Churchill Downs Racetrack is located on 175 acres and has a one-mile dirt track, a 7/8-mile turt
oximately 59,000 of our patrons. Churchill
variety of areas, strucrr
turt es, and buildings that provide reserved seating forff
the ground and measuring 171 feff et
Downs Racetrack has one of the largest 4K video boards in the world sitting 80 feff et above
wide by 90 feff et tall. This video board provides views of the fiff nish line and the entire race forff
on-track guests, including those
in the infiff eld and guests along the entire frff ont side of the racetrack. The faff cility also has permanent lighting to accommodate
night races. We have a saddling paddock, and the stabla e area has barns suffff iff cient to accommodate 1,400 horses and a 114-room
dormitoryrr
backstretch personnel. We have a state-of-ff the-art equine medical center and quarantine barns on the backside
area of Churchill Downs Racetrack which reinforff ces our ongoing commitment to equine safeff ty and supports our long-term
international growth strategy. The Churchill Downs Racetrack faff cility also includes a simulcast wagering faff cility. We also
own 83 acres of land at our auxiliaryrr

training faff cility, which is fiff ve miles frff om Churchill Downs Racetrack.

a
appr

forff

In 2002, we transfeff rred title of the Churchill Downs Racetrack faff cility to the City of Louisville, Kentuct ky and entered into a
30-year lease forff
the faff cility as part of the fiff nancing of improvements to the Churchill Downs Racetrack faff cility. We can
reacquire the faff cility at any time forff

$1.00 subject to the terms of the lease.

In July 2021, we announced three maja or multi-year capia tal investments to transforff m key areas of Churchill Downs Racetrack:
The Homestretch Club, the First Turn Experience, and the Paddock Project. The Company invested $36.0 million in the new
in May 2022. The Homestretch Club project converted 5,200
Homestretch Club which opened forff
outdoor bleacher seats into 3,250 premium reserved seats with all-inclusive amenities. The new premium reserved seats include
2,550 stadium club seats, 66 covered terraced dining tabla es forff
up to 200 guests
offff eff ring a "courtside seat" experience, fiff ve private 60-person VIP Hospitality Lounges as upgrades and an 18,600 square-foot
feff aturtt e bar.
indoor hospitality space with a grand staircase and 95-foot

up to 440 guests, 30 Trackside Lounges forff

the 148th Kentuct ky Derbyr

The Company is investing $90.0 million in the First Turn Experience. The First Turn Experience will provide additional
permanent stadium seating and a new track-level hospitality club replacing current temporaryrr Oaks and Derbyr
seating at the
fiff rst turt n of the racetrack. We plan to replace 3,400 temporaryrr
seats with 5,100 permanent covered stadium seats and a new
climate-controlled hospitality venue with reserved dining room tabla es, a trackside viewing terrace, and two
50,000 square-foot
new seating concourses to allow forff
an incremental 2,000 reserved seats. The First
Turn Experience is scheduled forff

better guest circulation and amenities forff

the 149th Kentuctt ky Derbyr

completion forff

in May 2023.

nearly everyrr guest. The
The Company is also investing up to $200.0 million in a Paddock Project to enhance the experience forff
redesigned area will improve the flff ow of guests throughout the paddock. The Paddock Project will create a larger paddock
viewing the horses prior to the races, a new Paddock Club in the area on the fiff rst flff oor under the Twin Spires
walking ring forff
that will provide views of the paddock and views of the tunne
l that the horses walk through, new hospitality and other amenities
guests in certain areas of the third flff oor clubhouse seats, and new terraces overlooking the paddock. The new Paddock
forff
Project is scheduled forff

the 150th Kentuct ky Derbyr

completion forff

in May 2024.

HiHH sii torical Racing Properties

The folff

lowing tabla e summarizes key inforff mation regarding our current historical racing properties:

State

Kentuct ky

New Hampshire

Virginia

Total

Property

City/ Location

Floor Space (Sq. ftff .)

Historical Racing
Machines ("HRMs")

Derbyr City Gaming

Louisville, Kentuct ky

Turfwff ay Park

Newport

Oak Grove

Ellis Park
Chasers(a)
Rosie's New Kent

Northern Kentuct ky

Southwestern Kentuct ky

Western Kentuct ky

Salem, New Hampshire

Central Virginia

Rosie's Richmond

Central Virginia

Rosie's Hampton

Southeast Virginia

Rosie's Vinton

Southern Virginia

Rosie's Dumfrff ies

Northern Virginia

Rosie's Collinsville

Southern Virginia

85,000

155,000

23,000

180,000

100,000

4,000

127,000

54,000

38,000

15,000

19,000

2,000

802,000

1,170

850

500

1,360

320

(a)

550

700

470

150

6,810

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(a) The Company plans to expand the charitabla e gaming faff cility to accommodate HRMs and tabla e games.

Kentuctt kyy

Louisii ville

The Company owns Derbyr
Churchill Downs Racetrack auxiliaryrr
mutuett

l racing license and has a simulcast center and a dining faff cility.

City Gaming which is a state-of-ff the-art HRM faff cility that was opened in September 2018 at the
training faff cility. Derbyr City Gaming operates under the Churchill Downs Racetrack pari-

We are investing $80.0 million to add 135,000 square feff et to the faff cility which will hold up to 450 additional HRMs and to
build a fiff ve-storyrr hotel with 123 rooms including amenities to better serve and attract guests. The expansion includes a VIP
gaming area, a new sports bar, a stage forff
live entertainment and an upscale-casual restaurant and bar to create a variety of new
foodff
gaming and hotel guests. We recently opened the new gaming space with 200 additional HRMs.
The hotel is scheduled forff

completion by the end of the second quarter of 2023.

and beverage options forff

City Gaming Downtown ("DCG
The Company is also building a new $90.0 million HRM entertainment venue called Derbyr
Downtown") in an existing building in downtown Louisville which is scheduled forff
completion in the second half of 2023. The
new entertainment venue will provide an HRM gaming area, a main-level sports bar with a stage forff music and live
entertainment, a premium bourbon
guests, including locals, tourists, and
libraryrr , and an elegant wine and charcuterie lounge forff
convention attendees. The faff cility has 200 onsite parking spaces, and a retail and merchandise store will be located on the street
level where guests can shop forff Kentuct ky Derby-

themed merchandise.

Southwtt

estern KeKK ntuckykk

Oak Grove Racing & Gaming ("Oak Grove") is a premier state-of-ff the-art live harness racing and HRM venue located on 240
acres appr
oximately one-hour north of Nashville, Tennessee in Oak Grove, Kentuct ky. Oak Grove owns and operates a 5/8-
mile harness racing track. In September 2020, the Company opened the simulcast and HRM faff cility with an event center and
foodff
and beverage venues. The 128-room hotel opened in October 2020. Oak Grove also has a 1,200-person grandstand,
3,000-person capaa

city outdoor amphitheater and stage, a state-of-ff the-art equestrian center, and a recreational vehicle park.

NorNN thett

rn KeKK ntuckykk

The Company opened Newport Racing & Gaming ("Newport") in October 2020. Newport is an HRM entertainment venue
including a simulcast area that operates as an extension of Turfwff ay Park. Turfwff ay Park opened in September 2022 as a state-
and beverage offff eff rings.
of-ff the-art live thoroughbred racing and historical racing entertainment venue with a sports bar and foodff

WeWW stern KeKK ntuckykk

The Company acquired Ellis Park Racing & Gaming ("Ellis Park") on September 26, 2022 and assumed the opportuni
build an HRM entertainment venue in Owensboro, Kentuct ky. We plan to invest appr
faff cilities in the next year.

ty to
oximately $75.0 million at these two

ViVV rgir nia

The Company acquired Colonial Downs Racetrack ("Colonial Downs") and six historical racing entertainment venues in
Virginia as part of the acquisition of substantially allll of thhe assets of Peninsula Pacififf c Entertainment LLC ("P2E") on
November 1, 2022 ("P2E Transaction"). Colonial Downs conducts live thoroughbred racing and has a one and one-quarter mile
f track oval in North America and two offff -ff track betting faff cilities ("OTBs"). The Company is investing
dirt track, the widest turtt
t a large gaming resort and 102-room hotel at the Dumfrff ies, Virginia location with the potential forff
$400.0 million to construcrr
expansion of up to 1,800 HRMs. The Dumfrff ies HRM faff cility and hotel is scheduled forff
completion in 2024. The Company is
also investing $30.0 million to develop a seventh HRM entertainment venue in Emporia, Virginia with a planned opening in the
second half of 2023.

NeNN w HamHH psm hire

On September 2, 2022, the Company completed the acquisition of Chasers Poker Room ("Chasers") located in Salem, New
oximately 30 miles frff om Boston, Massachusetts, that offff eff rs
Hampshire. Chasers is a charitabla e gaming faff cility located appr
poker and a variety of tabla e games. The Company plans to develop an expanded charitabla e gaming faff cility in Salem to
accommodate HRMs and tabla e games. We plan to invest appr
oximately $150.0 million in total in Salem, inclusive of the
amount paid to the sellers of Chasers to build the expanded faff cility.

TwTT inii SpiSS rii es

The TwinSpires segment includes the revenue and expenses forff
Casino and the United Tote businesses. These businesses are headquartered in Louisville, Kentuctt ky.

the TwinSpires Horse Racing, the TwinSpires Sports and

HorHH srr e Racing

TwinSpires Horse Racing operates the online horse racing wagering business forff TwinSpires.com, BetAmerica.com, and other
white-labea
l platforff ms; faff cilitates high dollar wagering by certain customers; and provides the Bloodstock Research Inforff mation
Services platforff m forff

horse racing statistical data.

an account frff om which these customers may place wagers via telephone, mobile appl

TwinSpires is one of the largest and most profiff tabla e legal online horse racing wagering platforff ms in the U.S. TwinSpires
l wagers through advance deposit wagering ("ADW") frff om customers residing in certain states who establa ish
accepts pari-mutuett
and fundff
ications or through the Internet.
This business is licensed as a multi-j- urisdictional simulcasting and interactive wagering hub in the state of Oregon and also
icabla e. This business also offff eff rs customers streaming video of live horse
holds licenses frff om various other states where appl
races, replays, and an assortment of racing and handicappi
ng inforff mation. BetAmerica.com is an online wagering business
licensed under TwinSpires that offff eff rs wagering on horse racing throughout the U.S. We also provide technology services to
third parties, and we earn commissions frff om white labea
l ADW products and services. Under these arrangements, we typically
provide an ADW platforff m and related operational services while the third party typically provides the brand, marketing, and
limited customer func

tions.

We announced two of these business-to-business agreements in 2022. On September 8, 2022, we announced a multi-year
agreement to enabla e FanDuel, a sportsbook and mobile betting operator, to create a fulff
ly integrated and seamless wagering
horse racing and sports with exclusive TV rights to racing content and non-exclusive
experience with a single wallet forff
Kentuctt ky Derbyr
sports wagering. On November 29, 2022, the Company announced a multi-year
agreement to provide Draftff Kings ADW technology and other services.

sponsorship rights forff

Sportstt and CasCC ino

Our TwinSpires Sports and Casino business includes the results of our retail sportsbooks at our wholly-owned gaming
properties and through third parties in Michigan and Arizona. The Company exited the direct online Sports and Casino
business during 2022 in everyrr
state except Pennsylvania and Arizona. We executed strategic market access agreements with
Bet365 in Pennsylvania and with Golden Nugget in Indiana to monetize our online wagering skins beginning in 2023.

UniUU ted TotTT e

United Tote manufaff cturt es and operates pari-mutuet
l wagering
l wagering systems forff
businesses. United Tote provides totalisator services which accumulate wagers, calculate payoffff sff and displays wagering data to
patrons who wager on horse races. United Tote has contracts to provide totalisator services to several third-party racetracks,
OTBs and other pari-mutuett
l wagering businesses and provides these services at our faff cilities. On August 11, 2022, we entered
into an agreement to sell 49% of United Tote, a wholly-owned subsidiaryrr of the Company to NYRARR Content Management
Solutions, LLC, a subsidiaryrr of the New York Racing Association ("NYRARR "). NYRARR is a not-forff
ation that
operates the three largest thoroughbred horse racing tracks in the state of New York. The transaction is subject to usual and
customaryrr closing conditions, including appl
ovals, and is expected to close during the fiff rst
icabla e regulatoryrr notices and appr
half of 2023.

racetracks, OTBs and other pari-mutuett

-profiff t corpor

GamGG inii g

The Gaming segment includes revenue and expenses forff
casino license. The Gaming segment generates revenue and expenses frff om slot machines, tabla e games, video lotteryrr
("VLTs"), video poker, HRM's, ancillaryrr
racing event-related services, and other miscellaneous operations. The folff
our gaming properties:

the casino properties and associated racetracks which support the
terminals
l wagering,
lowing tabla e summarizes key inforff mation regarding

and beverage services, hotel services, commission on pari-mutuet

foodff

State

Property

y
Wholly-owned

Florida
Iowa

Louisiana

Maine
Marylrr and

Mississippi

Calder Casino
Hard Rock Hotel and Casino
Sioux City
Fair Grounds Race Course and
Slots and Video Services LLC

Oxforff d Casino and Hotel
Ocean Downs Casino and
Racetrack
Harlow's Casino Resort and
Spa
Riverwalk Casino Hotel

New York

del Lago Resort and Casino

Pennsylvania

Presque Isle Downs and Casino

Pennsylvania

Lady Luck Casino Nemacolin

Equity Investments
y
q
Illinois

Ohio

Rivers Casino Des Plaines
Miami Valley Gaming and
Racing

Total

Acres

Casino Space
(Sq. ftff .)

Slots and
Video Lottery
Terminals

Table
Games

Hotel
Rooms

Retail
Sportsbook

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1
1
0
0
-
-
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K

106,000

1,090

N/A

41,000

33,000

27,000

70,000

33,000
25,000

94,000

153,000

25,000

660

1,620

960

850

670
600

1,670

1,550

600

140,000

1,510

190,000

937,000

2,200

13,980

—

18
11

120

—

358

N/A

100

N/A

105
80

205

N/A

544

ü
N/A

ü
ü

ü
N/A

145

167

85
22

270

—

120

g
Wholly-owned gaming properties

g p p

FlFF orida

Calder Casino ("Calder") in Miami Gardens, Florida is located near Hard Rock Stadium, home of the Miami Dolphins. Calder
offff eff rs two dining faff cilities and an entertainment venue. On June 17, 2022, the Company closed on the sale of 115.7 acres of
land near Calder forff
oximately $2.5 million per acre, to Link Logistics Real Estate, a Blackstone
portfolff

io company. The Company may sell 15-20 acres of this land in the futff urtt e forff

$291.0 million, or appr

retail development.

a
IowII

As part of the P2E Transaction, the Company acquired Hard Rock Hotel and Casino Sioux City ("Hard Rock Sioux City"),
which is a gaming faff cility and a hotel.

II
Indi

ana

The Company is investing up to $290.0 million in the development of the Terre Haute Casino Resort ("Terre Haute") in Terre
ing 400,000 square-feff et space with 1,000 slot
Haute, Indiana. Terre Haute will be a gaming entertainment venue feff aturt
machines, 34 tabla e games, a 122-room luxuryrr hotel, a retail sportsbook, and several food
and beverage offff eff rings. Terre Haute
is scheduled to be completed in early 2024.

Louisii iana

Fair Grounds Race Course & Slots ("Fair Grounds") is a gaming faff cility and race course with a bar, a simulcast faff cility, a one-
mile dirt track, a 7/8-mile turtt
oximately 80 live racing
oximately 5,000 guests, a general admissions
days each year. The faff cility includes clubhouse and grandstand seating forff
area, and dining faff cilities. The stabla e area consists of barns that can accommodate appr
oximately 1,900 horses and living
l wagering in 15 OTBs and Video Services LLC
quarters forff
("VSI") is the owner and operator of video poker machines in 12 OTBs in Louisiana.

f track, a grandstand, and a stabla ing area. Fair Grounds conducts appr

oximately 130 people. Fair Grounds also operates pari-mutuett

a
appr

MaiMM ne

Oxforff d Casino and Hotel ("Oxfoff rd"), located in Oxforff d, Maine, is a gaming faff cility with a hotel and one dining faff cility.

MarMM yr landl

Ocean Downs Casino and Racetrack is a gaming faff cility with a racetrack that conducts appr
days each year.

oximately 40 live harness racing

MiMM sii sisii sippi

Harlow’s Casino Resort and Spa is a gaming faff cility and hotel. Riverwalk Casino Hotel owns and operates a hotel and two
dining faff cilities.

NeNN w YorYY krr

As part of the P2E Transaction, the Company acquired del Lago Resort and Casino ("del Lago") in Waterloo, New York, which
is a gaming faff cility and a hotel.

Pennsys lvania

Presque Isle Downs and Casino ("Presque Isle") is a gaming faff cility with a racetrack that conducts 90 live thoroughbred racing
days each year.

The Company manages Lady Luck Casino Nemacolin ("Lady Luck Nemacolin"), appr
Woodlands Resort under a management agreement that expires in June 2023.

oximately one mile frff om the Nemacolin

Equity Investments

IlII linoisii

The Company acquired 61.3% equity ownership in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company
of Rivers Casino Des Plaines ("Rivers Des Plaines"), in March 2019. Rivers Des Plaines is a gaming entertainment venue
state-of-ff the-art
oximate 5,000 square-foot
located on 21 acres and has seven dining and entertainment faff cilities, and an appr
ff
BetRivers Sports Bar. During 2022, Rivers Des Plaines completed a 78,000 square-foot
expansion between the existing casino
ff
building and the recently enlarged parking garage. The two-storyrr addition includes a new restaurant and an expanded gaming
private events and live
flff oor on the fiff rst flff oor, as well as a 24-tabla e poker room, a 10,000 square-foot
ballroom forff
oximately 725 additional
entertainment, and a slot machine gaming area on the second flff oor. The expansion also added appr
gaming positions.

Ohio

The Company has a 50% equity investment in Miami Valley Gaming and Racing ("MVG"). MVG is a gaming entertainment
venue with a race course, racing simulcast center, a 5/8-mile harness racetrack, and a retail sportsbook.

Allll Othtt er

We have aggregated Arlington International Racecourse ("Arlington") as well as certain corpor
immaterial joint venturtt es in All Other to reconcile to consolidated results.

ate operations, and other

Arlington

ryrr 15, 2023, the Company closed on the previously
Arlington is located on 326 acres in Arlington Heights, Illinois. On Februarr
$197.2 million. The Company has classififf ed certain assets
announced agreement to sell the property to the Chicago Bears forff
of Arlington totaling $82.0 million as held forff
sale as of December 31, 2022, on the accompanying Consolidated Balance
Sheets. For more inforff mation, refeff r to Note 4, Dispositions and Assets Held For Sale, to the notes to consolidated fiff nancial
statements included in this Annual Report on Form 10-K.

r
CorCC por

ate

ate includes miscellaneous and other revenue, compensation expense, profeff ssional feff es and other general and

Corpor
rr
administrative expense not allocated to our segments.
Competition

Overview

We operate in a highly competitive industryrr with many participants, some of which have fiff nancial and other resources that are
discretionaryrr consumer spending, including
greater than ours. The industryrr
spectator sports, sports wagering and other entertainment and gaming options. Our brick-and-mortar casinos compete with
traditional and Native American casinos, VLTs, state-sponsored lotteries, and other forff ms of legalized gaming in the U.S. and
other jurisdictions.

faff ces competition frff om a variety of sources forff

Legalized gambling is currently permitted in various forff ms in many states and Canada. Other jurisdictions could legalize
gambling in the futff urtt e, and establa ished gaming jurisdictions could award additional gaming licenses or permit the expansion of
existing gaming operations.
ties become availabla e near our racing or gaming operations, such
gaming operations could have a material adverse impact on our business.

If additional gaming opportuni

Live and HiHH sii tortt

ical Racinii g

horses with other racetracks runni

oximately 34,000 thoroughbred horse races were conducted in the U.S. As a racetrack operator, we
In 2022 and 2021, appr
compete forff
ng live racing meets at or near the same time as our races. Our abia lity to compete
is substantially dependent on the racing calendar, number of horses racing and purse sizes. As a content provider, we compete
forff wagering dollars in the simulcast market with other racetracks conducting races at or near the same times as our races. In
recent years, competition has increased as more states legalize gaming and allow slot machines at racetracks with mandatoryrr
purse contributions. Our HRM entertainment venues in Kentuct ky, Virginia, and New Hampshire compete with regional
casinos in the area and other forff ms of legal and illegal gaming.

TwTT inii SpiSS rii es

HorHH srr e Racing

Our TwinSpires Horse Racing business competes with other ADW businesses forff
brick-and-mortar racetracks, casinos, OTBs, and other forff ms of legal and illegal sports betting.

both customers and racing content, as well as

Sportstt and CasCC ino

Our TwinSpires Sports and Casino business competes forff
customers with retail, mobile and online offff eff rings frff om commercial
brick-and-mortar casinos and racetracks. We also compete with daily faff ntasy sports gaming companies that are expanding into
mobile and online sports betting and iGaming, international sports betting businesses looking to expand into the U.S. market,
and other forff ms of legal and illegal sports betting and iGaming operations.

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GamGG inii g

customers with other casinos in
Our Gaming properties operate in highly competitive environments and primarily compete forff
the surrounding regional gaming markets. Our Gaming properties compete to a lesser extent with state-sponsored lotteries, offff -ff
track wagering, card parlors, online gambling, and other forff ms of legalized gaming in the U.S.
Human Capital

We believe our human capia tal is material to our operations and core to the long-term success of our Company. Our focff us is on
attracting innovative and collabor
and growing set of
businesses focff used on creating unique experiences forff

ative team members who want to build their skills in a successfulff

our guests.

Our PePP oplell

oximately 7,000 team members, of which 5,500 are fulff

l-time employees. As of
As of December 31, 2022, we had a total of appr
December 31, 2022, the Live and Historical Racing segment had appr
oximately 2,410 team members, the TwinSpires segment
had 410 team members, and the Gaming segment had 3,900 team members. Nearly three-quarters of the Live and Historical
l-time employees and nearly all the TwinSpires and Gaming segment team members are
Racing segment team members are fulff
fulff
oximately 260 of which are
fulff
tes signififf cantly through the course of the year primarily due to the
seasonal naturtt e of our businesses. We have the highest level of seasonal team members during the second quarter when we
traditionally runrr

l-time employees. The Company’s corpor
l-time. The number of seasonal employees flff uctuat

oximately 270 employees, appr

ate staffff consists of appr

the Kentuct ky Derby.

As of December 31, 2022, appr
have experienced no material interrupt

oximately 770 fulff

l-time employees were covered by 19 collective bargaining agreements. We

ions of operations due to disputes with our team members.

Diversrr itii ytt and InII clusion
ters innovation and cultivates a high-perforff mance culturt e that leverages the unique
We believe that a diverse workforff ce fosff
perspectives of everyrr
team member to profiff tabla y grow our businesses. The Company’s Board of Directors and executive
management team includes diverse individuals based on gender and race. The Company benefiff ts frff om the diverse experiences
of our directors and management that individually and collectively create a high-perforff mance culturt e focff used on executing our
strategic priorities to protect and grow our businesses effff eff ctively and effff iff ciently.

We believe diversity and inclusion helps the Company attract the best talent to grow our businesses and enabla es our businesses
to attract and delight customers and consumers. The Kentuct ky Derbyr
ty
forff
charities that support important aspects of our broader
our team members and the community to raise signififf cant fundi
shelter, education, and health related non-profiff ts. The Company
communities including fosff
also provides donations to non-profiff t organizations that support these initiatives within our communities.

ff
tering diversity and inclusion, food,

is a pillar of our community that provides the opportuni

ng forff

ent and Retett ntitt on

TalTT ell nt Acquisii itii itt on, Developmll
We invest in attracting, developing, and retaining our team members. Our philosophy is to communicate a clear purpos
e and
strategy, set challenging goals, drive accountabia lity, continuously assess, develop, and advance talent, and to embrace a
leadership-driven talent strategy. Our Company enabla es team members to grow in their current roles as well as to have
opportuni
ties to build new skills in other parts of the Company. We review talent and succession plans with our Chief
Executive Offff iff cer and Board of Directors periodically throughout the year. The process focff uses on accelerating talent
development, strengthening succession pipelines, and advancing diversity in gender, race, and experience.

ComCC pem nsatitt on, Benefe iff tii stt ,s SafSS eff tytt and WeWW llll nll ess
We strive to offff eff r market competitive salaries and wages forff
our team members, and we offff eff r comprehensive health and
retirement benefiff ts to eligible employees. Our core health and welfaff re benefiff ts are supplemented with specififf c programs to
manage or improve common health conditions and to provide a variety of voluntaryrr benefiff ts and paid time away frff om work
programs. We also provide several innovative programs designed to promote physical, emotional, and fiff nancial well-being.
Our commitment to the safeff ty of our employees, customers, and community remains a top priority, and we have safeff ty
programs at all our properties to faff cilitate identififf cation and implementation of safeff ty practices.
Governmental Regulations and Potential Legislative Changes

We are subject to various feff deral, state, local, and international laws and regulations that affff eff ct our businesses. The ownership,
operation, and management of our Live and Historical Racing, TwinSpires, and Gaming segments are subject to regulation
under the laws and regulations of each of the jurisdictions in which we operate. Our businesses and properties are also subject
to legislative actions at both the feff deral and state level.

Live and HiHH sii tortt

ical Racinii g Regue

latll

itt ons

Horse racing is a highly regulated industry.rr
l wagering on horse racing is subject to the
In the U.S., interstate pari-mutuett
Interstate Horseracing Act of 1978, as amended in 2000 ("IHA"). Under the IHA, racetracks and ADWs can accept interstate
ovals frff om (1) the host horse racetrack including a written agreement
offff -ff track wagers if the racetracks and ADWs have appr

with the horsemen’s group, if appl
If these
requirements are met, racetracks can commingle wagers frff om diffff eff rent racetracks and wagering faff cilities and broadcast horse
racing events to other licensed establa ishments.

icabla e, (2) the host racing commission, and (3) the offff -ff track racing commission.

In the U.S., individual states regulate the operations of racetracks located within their respective jurisdictions with the intent to,
among other things, protect the public frff om unfaff ir and illegal gambling practices, generate tax revenue, license racetracks and
states that
operators and prevent organized crime frff om being involved in the industry.rr Although the specififf c forff m may vary,rr
regulate horse racing generally do so through a horse racing commission or other gambling regulatoryrr authority.
In general,
regulatoryrr authorities perforff m background checks on all racetrack owners prior to granting the necessaryrr operating licenses.
Horse owners,
to licensing by
trainers,
governmental authorities.

judges, and backstretch personnel are also subject

jockeys, drivers, stewards,

The total number of days on which each racetrack conducts live racing may flff uctuatt
a
appr

ovals.

te annually based on appl

ications and

KeKK ntuckykk

In Kentuctt ky, horse racing racetracks and HRM faff cilities are subject to the licensing and regulation of the Kentuct ky Horse
Racing Commission ("KHRC"). Licenses to conduct live thoroughbred and standardbred racing meets, to participate in
simulcasting, to operate HRM faff cilities, and to accept advance deposit wagers frff om Kentuct ky residents are appr
oved annually
ications submitted by the racetracks in Kentuct ky. Changes in Kentuct ky laws or regulations may
by the KHRC based upon appl
limit or otherwise materially affff eff ct the types of HRMs that may be conducted and such changes, if enacted, could have an
adverse impact on our Kentuct ky HRM operations.

Louisii iana

In Louisiana, the 2021 Historical Horse Racing Act ("2021 HHR Act") allows OTBs to have up to 50 HRMs. On October 25,
2022, a number of individual plaintiffff sff associated with video poker and trucrr kstops, fiff led a lawsuit in the 19th Judicial District
Court in East Baton Rouge, Louisiana against certain racetracks in Louisiana, including Fair Grounds, alleging that the 2021
HHR Act is unconstitutt
ts to permit historical racing in a parish without a refeff rendum. As of
oximately 340 HRMs in OTBs in Louisiana. If the 2021 HHR Act is determined to
December 31, 2022, the Company had appr
be unconstitutt

ional it could have an adverse impact on our Louisiana HRM results which are reported in our Gaming segment.

ional to the extent it purpor
a

TwTT inii SpiSS rii es Regue

latll

itt ons and PotPP ett ntitt ali Legie sii latll

itt ve ChCC anges

TwinSpires is licensed in Oregon under a multi-j- urisdictional simulcasting and interactive wagering totalisator hub license
issued by the Oregon Racing Commission in accordance with Oregon law and the IHA. We also hold advance deposit
wagering licenses in certain other states where appr
opriate. Changes in the forff m of new legislation or regulatoryrr activity at the
state or feff deral level could adversely impact our mobile and online ADW business.

SporSS

tstt Betttt itt nii g and iGamGG inii g Regue

latll

itt ons and PotPP ett ntitt al Legie sii latll

itt ve ChCC anges

In May 2018, the United States Supreme Court strucrr k down the 1992 Profeff ssional and Amateur Sports Protection Act, which
had effff eff ctively banned sports wagering in most states. Removal of the ban gave states the authority to authorize sports
wagering. Thirty-three states have authorized sports betting and thirty of these states have sports betting operational as of
the number of allowabla e industryrr participants, license feff es, taxes,
December 31, 2022. Each state has diffff eff rent strucrr
and other operational requirements.

turt es forff

As of December 31, 2022, the Company is operational in nine states forff
and one state forff

iGaming.

retail sports betting, two states forff

online sports betting,

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itt ve ChCC anges

is a highly regulated industry.rr

The gaming industryrr
In the U.S., gaming laws are generally designed to protect consumers and
the viabia lity and integrity of the industry.rr Gaming laws may also be designed to protect and maximize state and local revenue
derived through taxes and licensing feff es imposed on industryrr participants as well as to enhance economic development and
tourism. To accomplish these public policy goals, gaming laws establa ish procedures to ensure that participants in the industryrr
meet certain standards of character and fiff tness. Gaming laws require industryrr participants to:

•

Ensure that unsuitabla e individuals and organizations have no role in gaming operations,

Establa ish procedures designed to prevent cheating and frff audulent practices,

Establa ish and maintain responsible accounting practices and procedures,

• Maintain effff eff ctive controls over fiff nancial practices, including establa ishment of minimum procedures forff

internal

fiff scal affff aff irs and the safeff guarding of assets and revenue,

• Maintain systems forff

reliabla e record keeping,

•

File periodic reports with gaming regulators,

Ensure that contracts and fiff nancial transactions are commercially reasonabla e, reflff ect faff ir market value and are
arms-length transactions,

Establa ish programs to promote responsible gambling and inforff m patrons of the availabia lity of help forff
gambling, and

problem

Enforff ce minimum age requirements.

A state regulatoryrr
agency with broad discretion to
regulate the affff aff irs of owners, managers and persons with fiff nancial interests in gaming operations. Gaming authorities in the
various jurisdictions in which we operate:

environment is establa ished by statuttt e and administered by a regulatoryrr

•

Adopt rulrr es and regulations under the implementing statuttt es,

Interprrr et and enforff ce gaming laws,

Impose disciplinaryrr sanctions forff

violations, including fiff nes and penalties,

Review the character and fiff tness of participants in gaming operations and make determinations regarding
suitabia lity or qualififf cation forff

licensure,

Grant licenses forff

participation in gaming operations,

Collect and review reports and inforff mation submitted by participants in gaming operations,

Review and appr
participants, securities offff eff rings and debt transactions engaged in by such participants, and

ove transactions, such as acquisitions or change-of-ff control transactions of gaming industryrr

Establa ish and collect feff es and taxes.

Any change in the gaming laws or regulations of a jurisdiction could have a material adverse impact on our gaming operations.

Licensinii g and Suitii abi

lii ill tii ytt Detett rmrr inii atitt ons

Gaming laws require us, each of our subsidiaries engaged in gaming operations, certain of our directors, offff iff cers and
employees, and in some cases, certain of our shareholders, to obtain licenses frff om gaming authorities. Licenses typically
icant qualififf es or is suitabla e to hold the license. Gaming authorities have veryrr broad
require a determination that the appl
discretion in determining whether an appl
licensing or should be deemed suitabla e. Criteria used in
determining whether to grant a license to conduct gaming operations, while varyirr ng between jurisdictions, generally include
icant; the fiff nancial stabia lity, integrity and
consideration of faff ctors such as the good character, honesty and integrity of the appl
icant, including whether the operation is adequately capia talized in the state and exhibits the abia lity to
responsibility of the appl
icant’s gaming faff cilities; the amount of revenue to be derived by the
maintain adequate insurance levels; the quality of the appl
appl
icant’s practices with respect to minority hiring
a
and training; and the effff eff ct on competition and general impact on the community.

icabla e state frff om the operation of the appl

icant’s gaming faff cility; the appl

icant qualififf es forff

In evaluating individual appl
character, the individual’s criminal historyrr and the character of those with whom the individual associates.

icants, gaming authorities consider the individual’s business experience and reputation forff

good

Many gaming jurisdictions limit the number of licenses granted to operate gaming faff cilities within the state and some states
limit the number of licenses granted to any one gaming operator. Licenses under gaming laws are generally not transfeff rabla e
without appr
limited
durations and require renewal frff om time to time. There can be no assurance that any of our licenses will be renewed. The
faff ilure to renew any of our licenses could have a material adverse impact on our gaming operations.

oval. Licenses in most of the jurisdictions in which we conduct gaming operations are granted forff

ications with the gaming authorities and may be required to be licensed, qualifyff or be found

Gaming authorities may investigate any subsidiaryrr engaged in gaming operations and may investigate any individual who has a
material relationship to or material involvement with any of these entities to determine whether such individual is suitabla e or
should be licensed as a business associate of a gaming licensee. Our offff iff cers, directors and certain key employees must fiff le
appl
suitabla e in many jurisdictions.
a
any cause that they deem reasonabla e. Qualififf cation and suitabia lity
Gaming authorities may deny an appl
determinations require submission of detailed personal and fiff nancial inforff mation folff
lowed by a thorough investigation.
Changes in licensed positions must be reported to gaming authorities. Gaming authorities have the abia lity to deny a license,
a
qualififf cation or fiff nding of suitabia lity and have jurisdiction to disappr

ove a change in a corpor

licensing forff

ate position.

ication forff

If one or more gaming authorities were to fiff nd that an offff iff cer, director or key employee faff ils to qualifyff or is unsuitabla e forff
licensing or unsuitabla e to continue having a relationship with us, we would be required to sever all relationships with such
opriate
person. Gaming authorities may also require us to terminate the employment of any person who refusff
a
appl

es to fiff le appr

ications.

In many jurisdictions, certain of our shareholders may be required to undergo a suitabia lity investigation similar to that described
. Many jurisdictions require any person who acquires benefiff cial ownership of more than a certain percentage of our
a
above
voting securities, typically 5%, to report the acquisition to gaming authorities, and may be required to appl
qualififf cation or
a fiff nding of suitabia lity. Most gaming authorities, however, allow an "instituttt

ional investor" to appl

y forff
a waiver.

a
y forff

y forff

a
es to appl

a fiff nding of suitabia lity or a license within the prescribed period aftff er being advised
Any person who faff ils or refusff
icabla e. Any shareholder found
unsuitabla e, as appl
it is required by gaming authorities may be denied a license or found
unsuitabla e or denied a license and who holds, directly or indirectly, any benefiff cial ownership of our voting securities beyond
such period of time as may be prescribed by the appl
icabla e gaming authorities may be guilty of a criminal offff eff nse. We may be
subject to disciplinaryrr action if,ff aftff er we receive notice that a person is unsuitabla e to be a shareholder or to have any other
relationship with us or any of our subsidiaries, we:

(i)

(ii)

(iii)

(iv)

pay that person any dividend or interest upon our voting securities,

allow that person to exercise, directly or indirectly, any voting right confeff rred through securities held by that
person,

pay remuneration in any forff m to that person forff

services rendered or otherwise, or

faff il to pursue all lawfuff l effff orff
necessary,rr

the immediate purchase of said voting securities forff

cash at faff ir market value.

ts to require such unsuitabla e person to relinquish voting securities including, if

ViVV olatll

itt ons of GamGG inii g Laws

If we violate appl
icabla e gaming laws, our gaming licenses could be limited, conditioned, suspended or revoked by gaming
authorities, and we and any other persons involved could be subject to substantial fiff nes. A supervisor or conservator can be
nted by gaming authorities to operate our gaming properties, or in some jurisdictions, take title to our gaming assets in the
a
appoi
ntment could be forff
jurisdiction, and under certain circumstances, income generated during such appoi
icabla e
state or states. Violations of laws in one jurisdiction could result in disciplinaryrr
action in other jurisdictions. As a result,
violations by us of appl

icabla e gaming laws could have a material adverse impact on our gaming operations.

feff ited to the appl

Some jurisdictions prohibit certain types of political activity by a gaming licensee, offff iff cers, directors and key employees. A
violation of such a prohibition may subject the offff eff nder to criminal and/or disciplinaryrr action.

ee
Repor

titt nii g and Record-keepiee nii g Requirii ementstt

We are required periodically to submit detailed fiff nancial and operating reports and furff nish any other inforff mation that gaming
authorities may require. Under feff deral law, we are required to record and submit detailed reports of currency transactions
involving greater than $10,000 at our gaming faff cilities and racetracks as well as any suspicious activity that may occur at such
faff cilities. Failure to comply with these requirements could result in fiff nes or cessation of operations. We are required to
t by an
maintain a current stock ledger that may be examined by gaming authorities at any time. If any securities are held in trusrr
agent or by a nominee, the record holder may be required to disclose the identity of the benefiff cial owner to gaming authorities.
A faff ilure to make such disclosure may be grounds forff
fiff nding the record holder unsuitabla e. Gaming authorities may require
certififf cates forff

our securities to bear a legend indicating that the securities are subject to specififf ed gaming laws.

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oval of TrTT ansactitt ons

oved by gaming authorities. We may not make a public offff eff ring of securities without the prior appr

Substantially all material loans, leases, sales of securities and similar fiff nancing transactions must be reported to and in some
cases appr
oval of certain
gaming authorities. Changes in control through merger, consolidation, stock or asset acquisitions, management or consulting
agreements, or otherwise are subjb ect to receipt of prior appr
oval of gaming authorities. Entities seeking to acquire control of us
or one of our subsidiaries must satisfyff gaming authorities with respect to a variety of stringent standards prior to assuming
control. Gaming authorities may also require controlling shareholders, offff iff cers, directors and other persons having a material
relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the appr
oval
process relating to the transaction.

s
License FeFF es and GamGG inii g TaxeTT

We pay substantial license feff es and taxes in many jurisdictions in connection with our gaming operations which are computed
in various ways depending on the type of gambling or activity involved. Depending upon the particular feff e or tax involved,
these feff es and taxes are payabla e with varyirr ng frff equency. License feff es and taxes are based upon such faff ctors as a percentage of

the gaming revenue received; the number of gambling devices and tabla e games operated; or a one-time feff e payabla e upon the
initial receipt of license and feff es in connection with the renewal of license. In some jurisdictions, casino tax rates are graduated
such that the tax rates increase as gaming revenue increases. Tax rates are subject to change, sometimes with little notice, and
such changes could have a material adverse impact on our gaming operations.

OpeOO ratitt onal Requirii ementstt

in construcrr

In most jurisdictions, we are subju ect to certain requirements and restrictions on how we must conduct our gaming operations.
In certain states, we are required to give prefeff rence to local suppliers and include minority and women-owned businesses and
organized labor
tion projects to the maximum extent practicabla e. We may be required to give employment
prefeff rence to minorities, women and in-state residents in certain jurisdictions. Our abia lity to conduct certain types of games,
review and
introduce new games or move existing games within our faff cilities may be restricted or subject to regulatoryrr
appr
oval. Some of our operations are subject to restrictions on the number of gaming positions we may have, and the
a
maximum wagers allowed to be placed by our customers.
Environmental Matters

We are subject to various feff deral, state and local environmental laws and regulations that govern activities that may have
adverse environmental effff eff cts, such as discharges to air and water, as well as the management and disposal of solid, animal and
hazardous wastes and exposure to hazardous materials. These laws and regulations, which are complex and subject to change,
include the United States Environmental Protection Agency ("EPA") and state laws and regulations that address the impacts of
manure and wastewater generated by Concentrated Animal Feeding Operations ("CAFO") on water quality, including, but not
limited to, storm and sanitaryrr water discharges. CAFO and other water discharge regulations include permit requirements and
water quality discharge standards. Enforff cement of these regulations has been receiving increased governmental attention.
Compliance with these and other environmental laws can, in some circumstances, require signififf cant capia tal expenditurt es. We
may incur futff urtt e costs under existing and new laws and regulations pertaining to storm water and wastewater management at
our racetracks. Violations can result in signififf cant penalties and, in some instances, interrupt

ion or cessation of operations.

We also are subject to laws and regulations that create liabia lity and cleanup responsibility forff
releases of hazardous substances
into the environment. Under certain of these laws and regulations, a current or previous owner or operator of property may be
the costs of remediating hazardous substances or petroleum products on its property, without regard to whether the
liabla e forff
owner or operator knew of,ff or caused, the presence of the contaminants, and regardless of whether the practices that resulted in
the contamination were legal at the time the contamination occurred. The presence of,ff or faff ilure to remediate properly, such
substances may materially adversely affff eff ct the abia lity to sell or rent such property or to borrow funds
using such property as
collateral. The owner of a property may be subject to claims by third parties based on damages and costs resulting frff om
environmental contamination emanating frff om the property.
Marks and Intellectual Property

We hold numerous state and feff deral service mark registrations on specififf c names and designs in various categories including
the entertainment business, appa
r goods, printed matter, housewares and glass. We license the use of these service
a
marks and derive revenue frff om such license agreements.
Available Inforff mation

rel, papea

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and
other Securities and Exchange Commission ("SEC") fiff lings, and any amendments to those reports and any other fiff lings that we
fiff le with or furff nish to the SEC under the Securities Exchange Act of 1934 are made availabla e frff ee of charge on our website
(www.churchilldownsincorpor
) as soon as reasonabla y practicabla e aftff er we electronically fiff le the materials with the
SEC and are also availabla e at the SEC’s website at www.sec.govg

ated.com

ITEM 1A.

RISK FACTORS

Our operations and fiff nancial results are subject to various risks and uncertainties, including those described below, that could
adversely affff eff ct our business, fiff nancial condition, results of operations, cash flff ows, and the trading price of our common stock.

Economic and External Risks

Our businii ess couldll be adversrr elyll affff eff ctett d by thtt e occurrence of extee rtt aordinii aryr eventstt ,s such as tett rrorisii t atttt actt ks,s publill c healtll htt
thtt reatstt ,s civilii unrest,tt and inii clell ment weathtt er,r inii cludinii g as a resultll of clill mii atett change

Our operating results depend, in large part, on revenues derived frff om customers visiting our casinos and racetracks, which is
subject to the occurrence and threat of extraordinaryrr events that may discourage attendance or expose us to substantial liabia lity.
Terrorist activity, including acts of domestic terrorism, civil unrest or other actions that discourage attendance at other
locations, or even the threat of such activity, including public concerns regarding air travel, militaryrr
actions, safeff ty and
additional national or local catastrophic incidents, could result in reduced attendance at Churchill Downs Racetrack and at our
other locations. A maja or epidemic or pandemic, outbrt eak of a contagious equine disease, or the threat of such an event, could
also adversely affff eff ct attendance and could impact the supply chain forff
tion projects resulting in higher costs
suspension of operations of all of our
and delays of the projects. The COVID-19 global pandemic resulted in the temporaryrr
wholly-owned gaming properties, certain wholly-owned racing operations, and the two casino properties related to our equity
investments. While we are constantly evaluating our security precautions in an effff orff
t to ensure the safeff ty of the public, no
security measures can guarantee safeff ty and there can be no assurances of avoiding potential liabia lities.

our maja or construcrr

Since horse racing is conducted outdoors, unfaff vorabla e weather conditions, including extremely high and low temperaturt es,
heavy rains, high winds, storms, tornadoes and hurricanes, could cause events to be canceled and/or attendance to be lower,
resulting in reduced wagering. Climate change could have an impact on longer-term naturt al weather trends. Extreme weather
events that are linked to rising temperaturtt es, changing global weather patterns, sea, land and air temperaturt es, as well as sea
levels, rain and snow could result in increased occurrence and severity of adverse weather events. Our operations are subject to
reduced patronage, disrupt
ions or complete cessation of operations due to weather conditions, naturt al disasters and other
casualties. The occurrence or threat of any such extraordinaryrr event at our locations, particularly at Churchill Downs Racetrack
and Kentuct ky Derbyr

and Oaks week, could have a material negative effff eff ct on our business and results of operations.

Our businii ess isii sensitii itt ve tott economic conditii itt ons which may affff eff ct consumer confn iff dence,e consumersrr ’ disii cretitt onaryr spes ndinii g,
imii pacm tstt our operatitt ons
or our access tott creditii inii a manner thtt at adversrr elyll

Economic trends can impact consumer confiff dence and consumers’ discretionaryrr spending, including:

•

Negative economic conditions and the persistence of elevated levels of unemployment can impact consumers’
disposabla e incomes and, thereforff e, impact the demand forff

entertainment and leisure activities.

Inflff ationaryrr periods negatively impact consumers' discretionaryrr
gaming and entertainment.
previously used forff

income and could reduce the amount of income

Declines in the residential real estate market, increases in individual tax rates and other faff ctors that we cannot
accurately predict may reduce the disposabla e income of our customers.

spending could affff eff ct us even if such decreases occur in other markets. For
Decreases in consumer discretionaryrr
racing content could cause
example, reduced wagering levels and profiff tabia lity at racetracks frff om which we carryrr
certain racetracks to cancel races or cease operations and thereforff e reduce the content we could provide to our
customers.

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Lower consumer confiff dence or reductions in consumers’ discretionaryrr
at our racetracks, our online wagering sites and gaming and wagering faff cilities, and reduced consumer spending overall.

spending could result in feff wer patrons spending money

Our access to and the cost of credit may be impacted to the extent global and U.S. credit markets are affff eff cted by downward
economic trends. Economic trends can also impact the fiff nancial viabia lity of other industryrr constituet nts, making collection of
amounts owed to us uncertain. Our abia lity to respond to periods of economic contraction may be limited, as certain of our costs
remain fiff xed or even increase when revenue declines.

WeWW are vulnll erablell

tott additii itt onal or inii creased taxe

s and feff es

We believe that the prospect of raising signififf cant additional revenue through taxes and feff es is one of the primaryrr
reasons that
certain jurisdictions permit legalized gaming. As a result, gaming companies are typically subject to signififf cant taxes and feff es
in addition to the normal feff deral, state, provincial and local income taxes and such taxes and feff es may be increased at any time.
From time to time, legislators and offff iff cials have proposed changes in tax laws or in the administration of laws affff eff cting the
horse racing, online wagering and casino industries. Many states and municipalities, including ones in which we operate, are
currently experiencing budgetaryrr pressures that may make it more likely they would seek to impose additional taxes and feff es on
our operations. We are subject to tax in multiple U.S. tax jurisdictions and judgment is required in determining our provision

income taxes, defeff rred tax assets or liabia lities and in evaluating our tax positions.

forff
It is not possible to determine the
likelihood, extent or impact of any futff urt e changes in tax laws or feff es, or changes in the administration of such laws; however, if
enacted, such changes could have a material adverse impact on our business.

ThTT e current novel coronavirii us (C(( OC VIVV DII -19) global
our businii ess,s fiff nii anciali
businii ess,s fiff nii anciali

conditii itt on and fiff nii anciali
resultll stt

conditii itt on and fiff nii anciali

pandemic has adversrr elyll affff eff ctett d, and couldll contitt nii ue tott adversrr elyll affff eff ct
isii sues couldll adversrr elyll affff eff ct our
resultll stt . Othtt er major publill c healtll htt
inii

thtt e fuff ture

In March 2020, the World Health Organization declared the COVID-19 outbrt eak a global pandemic. Considerabla e uncertainty
still surrounds the continued effff eff cts of the COVID-19 virusrr
, including the emergence of variant strains, and the extent of and
effff eff ctiveness of responses taken on international, national and local levels. The long-term impact of COVID-19 on the U.S.
and world economies and continued impact on our business remains uncertain, the duration and scope of which cannot
currently be predicted.

The COVID-19 pandemic and the measures taken by national, state, and local authorities in response have adversely affff eff cted
and could in the futff urtt e materially adversely impact the Company's business, results of operations, and fiff nancial condition. Our
operating results depend, in large part, on revenues derived frff om customers visiting our casinos and racetracks. During the
course of the pandemic, we experienced temporaryrr
suspension of operations of all of our wholly-owned gaming properties,
certain wholly-owned racing operations, and the two casino properties related to our equity investments. The introduction of
vaccine and faff cemask mandates in certain locations also impacted the number of customers visiting our properties.

the COVID-19 situat

opriate actions in accordance with the
The Company continues to monitor
recommendations and requirements of relevant authorities. The extent to which the COVID-19 pandemic may impact the
Company's long-term operational and fiff nancial perforff mance remains uncertain and will depend on many faff ctors outside the
Company's control, including the timing, extent, traja ectory,rr
and duration of the pandemic, the emergence of new variants, the
development, availabia lity, distribution, and effff eff ctiveness of vaccines and treatments, the imposition of protective public safeff ty
measures, and the impact of the pandemic on the global economy.

tion and take appr

Strategic Risks

A lacll k of confn iff dence inii
retaitt nii our customtt

ersrr and engage witii htt new customtt

ersrr

thtt e inii tett gre

itii ytt of our core businii esses or anyn detett rioratitt on inii our repuee

tattt

itt on couldll affff eff ct our abilii ill tii ytt

tott

Horse racing, pari-mutuett
l wagering, and casino gaming businesses depend on the public perception of integrity and faff irness in
their operations. To prevent cheating or erroneous payouts, necessaryrr oversight processes must be in place to ensure that such
activities cannot be manipulated. A lack or loss of confiff dence in the faff irness of our industries could have a material adverse
impact on our business.

Acts of frff aud or cheating in our gaming businesses through the use of counterfeff it chips, covert schemes and other tactics,
possibly in collusion with our employees, may be attempted or committed by our gaming customers with the aim of increasing
their winnings. Our gaming customers, visitors and employees may also commit crimes such as theftff in order to obtain chips
not belonging to them. We have taken measures to safeff guard our interests including the implementation of systems, processes
and technologies to mitigate against these risks, extensive employee training, surveillance, security and investigation operations
and adoption of appr
opriate security feff aturt es on our chips such as embedded radio frff equency identififf cation tags. Despite our
in preventing or detecting such culpabla e behavior and schemes in a timely manner and the
effff orff
relevant insurance we have obtained may not be suffff iff cient to cover our losses depending on the incident, which could result in
losses to our gaming operations and generate negative publicity, both of which could have an adverse effff eff ct on our reputation,
business, results of operations and cash flff ows.

ts, we may not be successfulff

Other faff ctors that could inflff uence our reputation include the quality of the services we offff eff r and our actions with regard to
local communities. Broad access to social media makes it easy forff
social issues such as diversity, human rights and support forff
anyone to provide public feff edback that can inflff uence perceptions of us or our properties.
It may be diffff iff cult to control or
effff eff ctively manage negative publicity, regardless of whether it is accurate. Negative events and publicity could quickly and
materially damage perceptions of us, our properties, or our industries, which, in turt n, could adversely impact our business,
fiff nancial condition or results of operations through loss of customers, loss of business opportuni
ties, lack of acceptance of our
company to operate in host communities, employee retention or recruirr

ting diffff iff culties or other diffff iff culties.

An inii abilii ill tii ytt
markerr

t,tt couldll

tott atttt rtt act and retaitt nii keye and highi

lyll qualill fi iff ed and skilii lll ell d persrr onnel,ll as wellll as disii ruptu itt ons inii

thtt e general labor

imii pacm t our abilii ill tii ytt

tott successfs uff llll yll develop,

operatett ,e and grow our businii ess

We believe that our success depends in part on our abia lity to hire, develop, motivate, and retain highly qualififf ed and skilled
ly hire, develop, motivate, and retain highly qualififf ed and
employees throughout our organization.
skilled employees, it is likely that we could experience signififf cant disrupt
ly
develop, operate, and grow our business could be impacted.

ions in our operations and our abia lity to successfulff

If we do not successfulff

the type of talent we seek to hire is increasingly intense in the geographi

Competition forff
c areas in which we operate. As a
result, we may incur signififf cant costs to attract and retain highly skilled employees. We may be unabla e to attract and retain the
personnel necessaryrr

to sustain our business or support futff urt e growth.

a
Certain of our key employees are required to fiff le appl
we operate and are required to be licensed or found
a key employee unsuitabla e forff
require us to terminate the employment of any person who refusff
signififf cantly impact our operations.

ications with the gaming authorities in each of the jurisdictions in which
suitabla e by these gaming authorities. If the gaming authorities were to fiff nd
licensing, we may be required to sever the employee relationship, or the gaming authorities may
ications. Either result could

es to fiff le appr

opriate appl

We have observed an increasingly competitive labor
workers, or labor
operations, which could negatively affff eff ct our fiff nancial condition, results of operations, or cash flff ows.

market. Increased employee turt nover, changes in the availabia lity of our
ly staffff our

shortages in our supply chain could result in increased costs and impact our abia lity to fulff

Our ComCC panm yn facff

es signi

ifi iff cant compem titt tii itt on, and we expe

ct compem titt tii itt on lell velsll

tott

inii crease

We faff ce an increasingly high degree of competition among a large number of participants operating frff om physical locations
and/or through online or mobile platforff ms, including destination casinos, riverboa
t casinos; dockside casinos; land-based
iGaming; sports betting; gaming at taverns in certain states, such as Illinois; gaming at trucrr k stop
casinos; video lottery;rr
establa ishments in certain states, such as Louisiana and Pennsylvania; historical horse racing in Kentuct ky; sweepstakes and
poker machines not located in casinos; faff ntasy sports; Native American gaming; and other forff ms of gaming in the U.S.
Furthermore, competition frff om internet lotteries, sweepstakes, illegal slot machines and skill games, faff ntasy sports and internet
or mobile-based gaming platforff ms, which allow their customers to wager on a wide variety of sporting events and/or play Las
Vegas-style casino games frff om home or in non-casino settings could divert customers frff om our properties and thus adversely
affff eff ct our fiff nancial condition, results of operations and cash flff ows. Currently, there are proposals that would legalize internet
poker, sports betting and other varieties of iGaming in a number of states. Expansion of land-based and iGaming in other
jurisdictions (both regulated and unregulated) could furff
ther compete with our traditional and iGaming operations, which could
have an adverse impact on our fiff nancial condition, results of operations and cash flff ows.

Legalized gaming is currently permitted in various forff ms throughout the U.S. and on various lands taken into trusrr
the
benefiff t of certain Native Americans in the U.S. and Canada. Other jurisdictions, including states adjacent to states in which we
currently have properties, have recently legalized, implemented and expanded gaming. Establa ished gaming jurisdictions could
award additional gaming licenses or permit the expansion or relocation of existing gaming operations. Voters and state
legislaturt es may seek to supplement traditional tax revenue sources of state governments by authorizing or expanding gaming
in the states that we operate in or the states that are adjacent to or near our existing properties. New, relocated or expanded
operations by other persons could increase competition forff

our operations and could have a material adverse impact on us.

t forff

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Our operations also faff ce competition frff om other leisure and entertainment activities, including shopping, athletic events,
television and movies, concerts and travel.

Our ChCC urchilii lll Downs Racetrtt ack and thtt e KeKK ntucky Derby may be adversrr elyll affff eff ctett d by changes inii
atttt ett ndance,e wagerinii g, and spons

sorsrr hipsii

consumer prefe eff rences,s

Our Churchill Downs Racetrack is dependent upon the number of people attending and wagering on live horse races. If interest
in horse racing is lower in the futff urt e, it may have a negative impact on revenue and profiff tabia lity in our Live and Historical
Racing segment. In addition, accidents and adverse events that may occur at our racetrack and any reputational damage as a
result may negatively impact attendance at our live horse races. If attendance at and wagering on live horse racing declines, it
could have a material adverse impact on our business.

The number and level of sponsorships are important to the success of the Kentuct ky Derby.
acquire new sponsors, and compete forff
business.

Our abia lity to retain sponsors,
sponsorships and advertising dollars could have a material adverse impact on our

WeWW are subject tott
agreementstt

signi

ifi iff cant risii ks associati ett d witii htt

our equitii ytt

inii vestmtt entstt ,s

strtt atett gie c allll ill ani

ces,s and othtt er thtt irii d-par

tytt

We pursue certain license opportuni
investments, joint venturt es, license arrangements and other alliances with third parties.

ties, development projects and other strategic business opportuni

ties through equity

lly establa ished agreements that we entered into with our co-investors and
Our equity investments are governed by mutuat
icabla e entity or other initiatives. The terms of the equity investments and the
thereforff e, we do not unilaterally control the appl
rights of our co-investors may preclude us frff om taking actions that we believe to be in the best interests of the Company.
Disagreements with our co-investors could result in delays in project development, including construcrr
tion delays, and ultimate
faff ilure of the project. Our co-investors also may not be abla e to provide capia tal to the appl
icabla e entity on the terms agreed to or
icabla e entity may be unabla e to obtain external fiff nancing to fiff nance their operations. Also, our abia lity to exit
at all, and the appl
the equity investments may be subject to contractuatt

l and other limitations.

With any third-party arrangement, there is a risk that our partners’ economic, business, or legal interests or objectives may not
be aligned with ours, leading to potential disagreements and/or faff ilure of the appl
icabla e project or initiative. We are also
l obligations, conflff icts arising between us and any of our
subject to risks relating to our co-investors’ faff ilure to satisfyff contractuatt
partners and changes in the ownership of any of our co-investors.

Any of these risks could have a material adverse impact on our business.

WeWW may not be ablell

tott respons

d tott rapid tett chnologi

cal changes inii a titt mii elyll manner,r which may cause customtt

er disii satitt sii fs acff

titt on

Our TwinSpires and Gaming segments are characterized by the rapia d development of new technologies and the continuous
introduction of new products. Our main technological advantage versus potential competitors is our softff ware lead-time in the
market and our experience in operating an Internet-based wagering network.
It may be diffff iff cult to maintain our competitive
technological position against current and potential competitors, especially those with greater fiff nancial resources. Our success
depends upon new product development and technological advancements, including the development of new wagering
platforff ms and feff aturt es. While we expend resources on research and development and product enhancement, we may not be
abla e to continue to improve and market our existing products or technologies or develop and market new products in a timely
manner. Further technological developments may cause our products or technologies to become obsolete or noncompetitive.

ThTT e concentrtt atitt on and evolutitt on of thtt e slotll machinii e and HRHH MRR manufu acff
couldll

imii posm e additii itt onal coststt on us

turinii g inii dustrtt yr or othtt er tett chnologi

cal conditii itt ons

A signififf cant amount of our revenue is attributabla e to slot, HRM, VLTs, and video poker machines operated by us at our
properties, and there are a limited number of slot machine and HRM manufaff cturtt ers servicing the industry.rr
It is important forff
competitive reasons that we offff eff r the most popular and up-to-date machine games with the latest technology to our guests. A
substantial maja ority of the slot machines sold in the U.S. in recent years were manufaff cturt ed by a feff w select companies, and
there has been extensive consolidation activity within the gaming equipment sector. Recently, the prices of new machines have
escalated faff ster than the rate of inflff ation and slot machine manufaff cturt ers have occasionally refusff
ed to sell slot machines
feff aturt
ing the most popular games, instead requiring participating lease arrangements in order to acquire the machines.
Participation slot machine leasing arrangements typically require the payment of a fiff xed daily rental. Such agreements may
also include a percentage payment of coin-in or net win. Generally, a participating lease is substantially more expensive over
the long term than the cost to purchase a new machine. For competitive reasons, we may be forff ced to purchase new slot
machines or enter into participating lease arrangements that are more expensive than the costs associated with the continued
operation of our existing slot machines. If the newer slot machines do not result in suffff iff cient incremental revenue to offff sff et the
increased investment, it could adversely affff eff ct our operations and profiff tabia lity.

We rely on a variety of hardware and softff ware products to maximize revenue and effff iff ciency in our operations. Technology in
the gaming industryrr
is developing rapia dly, and we may need to invest substantial amounts to acquire the most current gaming
and hotel technology and equipment in order to remain competitive in the markets in which we operate. We rely on a limited
number of vendors to provide video poker and slot machines and any loss of our equipment suppliers could impact our
operations. Ensuring the successfulff

implementation and maintenance of any new technology acquired is an additional risk.

Our operatitt ons inii
racetrtt acks,s and thtt e faiff
adversrr e efe fff eff ct on our businii ess,s resultll stt of operatitt ons and fiff nii ancial conditii itt on

jurisii dictitt ons depeee nd on agreementstt witii htt

entett r inii tott or mainii taitt nii

lii ure tott

certaitt nii

inii cludinii g horsrr emen and othtt er
tott us couldll have a matett riali
ell
thtt ese agreementstt on tett rmrr s acceptee abl

inii dustrtt yr constitt tii uentstt

terms as they expire, our business may be disrupt

Our operations in certain jurisdictions depend on agreements with third parties. If we are unabla e to renew these agreements on
satisfaff ctoryrr
ed. For example, the Interstate Horseracing Act, as well as
various state racing laws, require that we have written agreements with the horsemen at our racetracks in order to simulcast
races, and, in some cases, conduct live racing. Certain industryrr groups negotiate these agreements on behalf of the horsemen
(the "Horsemen’s Groups"). These agreements provide that we must receive the consent of the Horsemen’s Groups at the

racetrack conducting live races beforff e we may allow third parties to accept wagers on those races. We currently negotiate
forff mal agreements with the appl
icabla e Horsemen’s Groups at our racetracks on an annual basis. The faff ilure to maintain
al by a Horsemen’s Group
agreements with, or obtain consents frff om, the Horsemen's Groups on satisfaff ctoryrr
to consent to third parties accepting wagers on our races or our accepting wagers on third-party races could have a material
adverse impact on our business, as such faff ilure will result in our inabia lity to conduct live racing and export and import
simulcasting.

terms or the refusff

From time to time, certain Horsemen’s Groups have withheld their consent to send or receive racing signals among racetracks.
Failure to receive the consent of these Horsemen’s Groups forff
new and renewing simulcast agreements could have a material
adverse impact on our business. We also have written agreements with certain Horsemen’s Groups with regards to the proceeds
of gaming machines in certain states that may be required to operate such gaming.

We have agreements with other racetracks forff
the distribution of racing content through both the import of other racetracks’
signals forff wagering at our properties and the export of our racing signal forff wagering at other racetracks’ faff cilities, OTBs, and
ADWs. From time to time, we may be unabla e to reach agreements on terms acceptabla e to us. As a result, we may be unabla e to
distribute our racing content to other locations or to receive other racetracks’ racing content forff wagering at our racetracks. The
inabia lity to distribute our racing content could have a material adverse impact on our business, results of operations and
fiff nancial condition.

WeWW inii tett nd tott
be no assurance thtt at we wilii lll be ablell

focff us on markerr

t access and our retaitt

our TwTT inii SpiSS rii es SporSS
tott compem tett efe fff eff ctitt velyll or thtt at we wilii lll generatett sufu fff iff cient returnrr s on our inii vestmtt ent

tstt and CasCC inii o businii ess and thtt ere can

lii operatitt ons forff

During the second quarter of 2018, the U.S. Supreme Court overturt ned the feff deral ban on sports betting. Thirty-three states
have authorized sports betting and thirty of these states have sports betting operational as of December 31, 2022. Additional
states may legalize sports betting in the futff urtt e. Each state has diffff eff rent strucrr
the number of allowabla e industryrr
sports betting and online gaming is rapia dly
participants, license feff es, taxes, and other operational requirements. The market forff
evolving and highly competitive with an increasing number of competitors. The success of our retail and online sportsbook and
online casino operations are dependent on a number of faff ctors that are beyond our control, including:

turt es forff

•

the timing of adoption of regulations authorizing betting and gaming activities,

operating requirements and other restrictions,

the number of allowabla e industryrr participants,

the license feff es and tax rates,

our abia lity to gain market share in a newly developing market,

the potential that the market does not develop as we anticipate,

our abia lity to compete with new entrants in the market,

changes in consumer demographi

cs and public tastes and prefeff rences, and

the availabia lity and popularity of other forff ms of entertainment.

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There can be no assurance as to the returt ns that we will receive frff om TwinSpires Sports and Casino business.

Operational Risks

Our businii ess isii subject tott onlill nii e securitii ytt risii k, inii cludinii g cyc ber-rr securitii ytt breaches. Loss or misii use of our stortt ed inii fn orff mrr atitt on
as a resultll of such a breach, inii cludinii g customtt
cement actitt ons or
othtt er lill tii itt gat

ersrr ’ persrr onal inii fn orff mrr atitt on, couldll

lell ad tott government enfn orff

lii ill tii ytt ,yy or othtt erwisii e harmrr

itt on, potett ntitt ali

our businii ess

i
lill abi

We receive, process, store and use personal inforff mation and other customer and employee data by maintaining and transmitting
customers’ personal and fiff nancial inforff mation, credit card settlements, credit card funds
transmissions, mailing lists and
reservations inforff mation. Our collection of such data is subject to extensive regulation by private groups, such as the payment
card industry,rr

as well as governmental authorities, including gaming authorities.

There are numerous feff deral, state and local laws regarding privacy and the storing, sharing, use, processing, disclosure and
protection of personal inforff mation and other data, and such privacy laws and regulations continue to evolve. Many states have
passed laws requiring notififf cation to customers when there is a security breach forff
personal data, such as the 2002 amendment
to Califorff nia’s Inforff mation Practices Act or requiring the adoption of minimum inforff mation security standards that are oftff en
vaguely defiff ned and diffff iff cult to implement. Califorff nia has adopted the Califorff nia Consumer Privacy Act of 2018 (the
"CCPA"), which went into effff eff ct on Januaryrr 1, 2020, providing Califorff nia consumers greater control of the inforff mation

collected, stored, and sold, and other states are considering similar legislation. The CCPA provides a private right of action (in
addition to statuttt oryrr damages) forff Califorff nia residents whose sensitive personal inforff mation was breached as a result of a
business’s violation of its duty to reasonabla y secure such inforff mation. The costs of compliance with these laws may increase as
a result of changes in interprrr etation or changes in law. Any faff ilure on our part to comply with these laws or our privacy
policies may subject us to signififf cant liabia lities, including governmental enforff cement actions or litigation.

. Interrupt

Our systems and processes that are designed to protect customer inforff mation and prevent data loss and other security breaches,
including systems and processes designed to reduce the impact of a security breach at a third-party vendor, may not be
ions in our services or a breach of a customer’s secure data could cause current or potential users to believe
successfulff
that our systems are unreliabla e, which could permanently harm our reputation and brand. These interrupt
ions could also
increase the burden on our engineering staffff ,ff which, in turt n, could delay our introduction of new feff aturt es and services on our
fiff nes, and other penalties, which
websites and in our casinos. Such incidents could give rise to remediation costs, monetaryrr
could be signififf cant. We attempt to protect against this risk with our property and business interrupt
ion insurance, which covers
damage or interrupt
ion of our systems, although there is no assurance that such insurance will be adequate to cover all potential
losses.

Third parties we work with, such as vendors, may violate appl
icabla e laws or our privacy policies, and such violations may also
put our customers’ inforff mation at risk and could in turt n have an adverse impact on our business. We are also subject to
payment card association rulrr es and obligations under each association’s contracts with payment card processors. Under these
the associated expense and
rulrr es and obligations, if inforff mation is compromised, we could be liabla e to payment card issuers forff
penalties. If we faff il to folff
security standards, even if no customer inforff mation is compromised, we
could incur signififf cant fiff nes or experience a signififf cant increase in payment card transaction costs.

low payment card industryrr

Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry,rr
and hackers
and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks. Many companies,
including ours, have been the targets of such attacks. Any security breach caused by hacking which involves effff orff
ts to gain
unauthorized access to inforff mation or systems, or to cause intentional malfunc
ion of data, softff ware,
hardware or other computer equipment, and the inadvertent transmission of computer virusrr
es could harm our business. Though
ion or breach, any faff ilure to maintain
it is diffff iff cult to determine what harm may directly result frff om any specififf c interrupt
perforff mance, reliabia lity, security and availabia lity of our network infrff astrucrr
turt e to the satisfaff ction of our players may harm our
reputation and our abia lity to retain existing players and attract new players.

tions or loss or corrupt

ts may not be successfulff

The costs to eliminate or address the forff egoing security threats and vulnerabia lities beforff e or aftff er a cyber-incident could be
ions, delays or cessation of service, and
signififf cant. Our remediation effff orff
loss of existing or potential suppliers or customers. As threats related to cyber-attacks develop and grow, we may also fiff nd it
necessaryrr
turtt e, which may impact our results of operations. We
have insurance coverage forff
protection against cyber-attacks, which is designed to cover expenses around notififf cation, credit
monitoring, investigation, crisis management, public relations, and legal advice. This insurance coverage may not be suffff iff cient
to cover all possible claims, and we could suffff eff r losses that could have a material adverse effff eff ct on our business.

ther investments to protect our data and infrff astrucrr

and could result in interrupt

to make furff

Because the techniques used to obtain unauthorized access, disabla e or degrade service, or sabot
age systems, change frff equently
and oftff en are not recognized until launched against a target, we may be unabla e to anticipate these techniques or to implement
adequate preventative measures.

Our operatitt ons relyll heavilii yll on tett chnology
tett chnology

services couldll cause a signi

ifi iff cant and contitt nii ued disii ruptu itt on tott our operatitt ons

services,s and catastt

trtt ophic eventstt and sys stett m faiff

lii ures witii htt

respes

ct tott

thtt ese

ion or faff ilure in our technology
We rely on inforff mation technology and other systems to manage our business. A disrupt
systems or operations in the event of a cyber-attack, maja or earthquake, weather event, terrorist attack or other catastrophic event
could interrupt
our operations, damage our properties, and reduce the number of customers who visit our faff cilities in the
affff eff cted areas. Security breaches could expose the Company to a risk of loss or misuse of our or our customers’ inforff mation,
litigation, and potential liabia lity. In addition, cyber incidents that impact the availabia lity, reliabia lity, speed, accuracy, or other
tioning of our technology systems could impact our operations. A signififf cant cyber incident, including system
proper func
faff ilure, security breach, disrupt
or delay our operations, result in a violation of
appl
icabla e privacy and other laws, damage our reputation, subject us to litigation, cause a loss of customers or give rise to
a
remediation costs, monetaryrr

fiff nes and other penalties, which could be signififf cant.

ion by malware or other damage could interrupt

Our online wagering, HRM and brick-and-mortar casino businesses depend upon our communications hardware and our
computer hardware. We have built certain redundancies into our systems to attempt to avoid downtime in the event of outages,
ion frff om flff oods, fiff res, power loss,
system faff ilures or damage. Our systems also remain vulnerabla e to damage or interrupt
es, computer denial-of-ff service
telecommunication faff ilures, terrorist cyber-attacks, hardware or softff ware error, computer virusrr
attacks and similar events. Despite any precautions we may take, the occurrence of a naturt al disaster or other unanticipated

problems could result in lengthy interrupt
rr
and our services could result in an immediate, and possibly substantial, loss of revenue.

ions in our services. Any unscheduled interrupt

ion in the availabia lity of our websites

WeWW may not be ablell
exiee sii titt nii g facff

ilii ill tii itt es on titt mii e,e on budget or as planll ned

tott

identitt fi yff and / or complm ell tett acquisii itii itt ons,s divestitt tii ures,s developmll

ent of new venues or thtt e expan

sion of

We pursue acquisitions, divestiturtt es, development of new venues and expansion of existing faff cilities to grow our business.

We faff ce challenges in identifyiff ng and completing acquisitions or divestiturt e opportuni
ties or other development or expansion
projects that fiff t with our strategic objectives. These projects require signififf cant capia tal commitments and the incurrence of
additional debt. These projects also have risks associated with managing and integrating the acquisition or expansion project.

ions and inflff ationaryrr pressure related to these projects could lead to delays and higher project costs. The
Supply chain disrupt
acquisition or divestiturt e of businesses may be delayed by external faff ctors beyond our control including feff deral, state, and local
issues.

The impact of these risks may cause us not to realize the intended benefiff ts of these capia tal investments which could have a
material adverse impact on our business.

WeWW may expe

rience difi fff iff cultll ytt

inii

inii tett gre atitt nii g recent or fuff ture acquisii itii itt ons inii tott our operatitt ons

We have completed acquisition transactions in the past, and we may pursue acquisitions frff om time to time in the futff urt e. The
integration of newly acquired businesses into our operations has required and will continue to require the
successfulff
expenditurt e of substantial managerial, operating, fiff nancial and other resources and may also lead to a diversion of our attention
frff om our ongoing business concerns. We may not be abla e to successfulff
ly integrate new businesses, manage the combined
operations or realize projected revenue gains, cost savings and synergies in connection with those acquisitions on the timetabla e
contemplated, if at all. Management of the new business operations, especially those in new lines of business or diffff eff rent
c areas, may require that we increase our managerial resources. The process of integrating new operations may also
geographi
a
interrupt
the activities of those businesses, which could have a material adverse impact on our business. The costs of
rr
integrating businesses we acquire could signififf cantly impact our short-term operating results. These costs could include the
folff

lowing:

•

restrucrr

turt

ing charges associated with the acquisitions,

non-recurring transaction costs, including accounting and legal feff es, investment banking feff es and recognition of
transaction-related costs or liabia lities, and

costs of imposing fiff nancial and management controls and operating, administrative and inforff mation systems.

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1
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We perforff m fiff nancial, operational, and legal diligence on the businesses we purchase; however, an unavoidabla e level of risk
remains regarding the actuat
ly
and integrate them into our existing operations. In any acquisition we make, we faff ce risks that include the folff

l condition of these businesses and our abia lity to continue to operate these businesses successfulff

lowing:

•

the risk that the acquired business may not furff
was worth,

ther our business strategy or that we paid more than the business

the risk that the fiff nancial perforff mance of the acquired business declines or faff ils to meet our expectations frff om and
aftff er the date of acquisition,

the potential adverse impact on our relationships with partner companies or third-party providers of technology or
products,

the possibility that we have acquired substantial undisclosed liabia lities forff which we may have no recourse against
the sellers or third-party insurers,

costs and complications in maintaining required regulatoryrr
necessaryrr

to implement the acquisition in accordance with our strategy,

a
appr

ovals or obtaining furff

ther regulatoryrr

a
appr

ovals

the risks of acquiring businesses and/or entering markets in which we have limited or no prior experience,

the potential loss of key employees or customers,

the possibility that we may be unabla e to retain or recruirr
acquired businesses, and

t employees with the necessaryrr

skills to manage the

changes to legal and regulatoryrr guidelines which may negatively affff eff ct acquisitions.

If we are unsuccessfulff

in overcoming these risks, it could have a material adverse impact on our business.

ThTT e developmll
othtt er uncertaitt nii titt es

ent of new venues and thtt e expan

sion of exiee sii titt nii g facff

ilii ill tii itt es isii costltt yll and susceptee itt bli ell

tott delayll

s,s cost overruns and

t and open hotels, casinos, other gaming venues, or racetracks in response to opportuni

We may decide to develop, construcrr
ties
that may arise. For example, we've announced multiple maja or multi-year capia tal investments to transforff m key areas of
Churchill Downs Racetrack, as well as other capia tal investments such as the build out of Derbyr
City Gaming Downtown,
Rosie's Emporia and Dumfrff ies, the Ellis Park Owensboro Annex, a charitabla e gaming faff cility in New Hampshire and the Terre
Haute Casino Resort. Futurt e development projects may require signififf cant capia tal commitments and the incurrence of
additional debt, which could have a material adverse impact on our business.
In addition, we may not receive the intended
benefiff ts of such capia tal investments.

Ownersrr hipii and developmll
tott risii k, inii cludinii g risii ks relatll ett d tott envirii onmentaltt

ent of our real estattt ett requirii es signi

i
lill abi

lii ill tii itt es

ifi iff cant expe

nditii ures and ownersrr hipii of such propertitt es isii subject

We own extensive real estate holdings and make signififf cant capia tal investments to grow our operations. All real estate
investments are subject to risks including the folff
lowing: general economic conditions, such as the availabia lity and cost of
fiff nancing; local and national real estate conditions, such as an oversupply of residential, offff iff ce, retail or warehousing space, or a
reduction in demand forff
real estate in the area; governmental regulation, including taxation of property and environmental
legislation; and the attractiveness of properties to potential purchasers or tenants. Signififf cant expenditurtt es, including property
taxes, debt repayments, maintenance costs, insurance costs and related charges, must be made throughout the period of
ownership of real property. Such expenditurt es may negatively impact our operating results.

We are subject to a variety of feff deral, state and local governmental laws and regulations relating to the use, storage, discharge,
emission and disposal of hazardous materials. Environmental laws and regulations could hold us responsible forff
the cost of
cleaning up hazardous materials contaminating real property that we own or operate (or previously owned or operated) or
properties at which we have disposed of hazardous materials, even if we did not cause the contamination. Some of our faff cilities
are subject to CAFO regulations.
If we faff il to comply with environmental laws or if contamination is discovered, a court or
government agency could impose severe penalties or restrictions on our operations or assess us with the costs of taking
remedial actions. Enforff cement of such regulations have been receiving increased governmental attention and compliance with
these and other environmental laws can, in some circumstances, require signififf cant capia tal expenditurt es (including with respect
to fiff nes).

HorHH srr e racinii g isii an inii herentltt yll dangerous spor

t,tt and our racetrtt acks are subject tott persrr onal inii jn uryr lill tii itt gat

itt on

Personal injuries and injuries to horses have occurred during races or workouts, and may continue to occur, which could subject
us to negative publicity and / or litigation. Negative publicity may lead some customers to avoid the Company’s properties or
could cause horse owners to avoid racing their horses at our racetracks. Any litigation resulting frff om injuries at our properties
could be costly and time consuming and could divert our management and key personnel frff om our business operations. We
buy insurance forff
all losses. Due to the potential impact
of negative publicity and inherent uncertainty related to the outcome of litigation, there can be no assurance that the resolution
of any particular claim or proceeding would not have a material adverse effff eff ct on our results of operations, fiff nancial position or
liquidity.

all of our racetracks; however, our coverage may not be suffff iff cient forff

Anyn violatll
latll
regue

itt ons couldll have a negat

itt ve imii pacm t on us

itt on of thtt e ForFF eigni CorCC ruptu PrPP actitt ces Act,tt othtt er simii

ilii arll

lawll

s and regue

latll

itt ons,s or applill cablell antitt -ii moneye laull nderinii g

Practices Act (the "FCPA") and other anti-corrupt

We are subject to risks associated with doing business outside of the U.S., including exposure to complex forff eign and U.S.
ion laws which generally prohibit
regulations such as the Foreign Corrupt
e of obtaining or
U.S. companies and their intermediaries frff om making improper payments to forff eign offff iff cials forff
retaining business. Violations of the FCPA and other anti-corrupt
ion laws may result in severe criminal and civil sanctions and
other penalties.
It may be diffff iff cult to oversee the conduct of any contractors, third-party partners, representatives, or agents
who are not our employees, potentially exposing us to greater risk frff om their actions. If our employees or agents faff il to comply
with appl
icabla e laws or company policies governing our international operations, we may faff ce legal proceedings and actions
a
which could result in civil penalties, administration actions and criminal sanctions.

the purpos

Any determination that we have violated any anti-corrupt
ion laws could have a material adverse impact on our business. We
also deal with signififf cant amounts of cash in our operations and are subject to various reporting and anti-money laundering
regulations. Any violation of anti-money laundering laws or regulations by any of our properties could have a material adverse
impact on our business.

WeWW are subject tott payment-tt relatll ett d risii ks,s such as risii k associati ett d witii htt
have adversrr e efe fff eff ctstt on our businii ess due tott charger backs frff om customtt

thtt e frff audulell nt use of creditii or debitii cards which couldll
ersrr

ng and/or payment options. For certain fundi

ng and payments to accounts using a variety of methods, including electronic funds

transfeff r ("EFT") and credit
We allow fundi
and debit cards. As we continue to introduce new fundi
ng or payment options to our players, we may be subject to additional
regulatoryrr and compliance requirements. We also may be subject to the risk of frff audulent use of credit or debit cards, or other
fundi
ng or payment options, including credit and debit cards, we may pay
ff
interchange and other feff es which may increase over time and, thereforff e, raise operating costs and reduce profiff tabia lity. We rely
on third parties to provide payment-processing services and it could disrupt
our business if these companies become unwilling
or unabla e to provide these services to us. We are also subject to rulrr es and requirements governing EFT which could change or
be reinterprrr eted to make it diffff iff cult or impossible forff
us to comply. If we faff il to comply with these rulrr es or requirements, we
may be subject to fiff nes and higher transaction feff es or possibly lose our abia lity to accept credit or debit cards, or other forff ms of
payment frff om customers which could have a material adverse impact on our business.

Chargebacks occur when customers seek to void credit card or other payment transactions. Cardholders are intended to be abla e
to reverse card transactions only if there has been unauthorized use of the card or the services contracted forff
have not been
provided.
In our business, customers occasionally seek to reverse online gaming losses through chargebacks. Our control
procedures to protect frff om chargebacks may not be suffff iff cient to protect us frff om adverse effff eff cts on our business or results of
operations.

tt
WorWW krr stoppage

s and othtt er labor

problell ms couldll negat

itt velyll

imii pacm t our fuff ture planll

s and lill mii

itii our operatitt onal flff ell xiee bii

lii ill tii ytt

Some of our employees are represented by labor
unions. A strike or other work stoppage at one of our properties could have an
adverse impact on our business and results of operations. From time to time, we have also experienced attempts to unionize
certain of our non-union employees. We may experience additional union activity in the futff urt e. Any such union organization
effff orff

ions in our business and result in signififf cant costs.

ts could cause disrupt

Legal and Regulatory Risks

WeWW facff

e risii ks relatll ett d tott pendinii g or fuff ture lell gal

proceedinii gs and othtt er actitt ons

From time to time, we are a party in various lawsuits and judicial and governmental actions. No assurance can be provided as
to the outcome of these lawsuits and actions which can be expensive and time consuming. We may not be successfulff
in the
defeff nse or prosecution of these lawsuits or actions, which could result in settlements, costs or damages that could have a
material adverse impact on our business, fiff nancial condition, results of operations, and reputation. Such matters may include
investigations or litigation frff om various parties, including vendors, customers, state and feff deral agencies, stockholders and
employees relating to intellectuat
ate governance, commercial or other
matters arising in the ordinaryrr course of business.

l property, employment, consumer, personal injury,rr

rr
corpor

large or indeterminate amounts, and the magnitude

in such lawsuits oftff en
We have also been subject to claims in cases concerning or similar to class action allegations. Plaintiffff sff
seek recoveryrr of veryrr
of the potential loss and defeff nse costs relating to such
lawsuits may not be accurately estimated. We evaluate all of the claims and proceedings involving us to assess the expected
outcome, and where possible, we estimate the potential losses we may incur. In many cases, including class action matters, we
may not be abla e to estimate the potential losses we will incur and/or our estimates may prove to be insuffff iff cient. These
assessments are made by management based on the inforff mation availabla e at the time made and require the use of a signififf cant
amount of judgment, and actuatt
l outcomes or losses may materially diffff eff r. Regardless of whether any claims against us are
valid, or whether we are ultimately held liabla e, such litigation may be expensive to defeff nd and may divert resources away frff om
our operations and negatively impact earnings. We may not be abla e to obtain adequate insurance to protect us frff om these types
of litigation matters or extraordinaryrr business losses.

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Our operatitt ons are highi

lyll regue

latll ett d and changes inii

thtt e regue

latll ortt

yr envirii onment couldll adversrr elyll affff eff ct our businii ess

l wagering through ADWs, casino gaming, online
We conduct live and historical pari-mutuett
some local regulation. These regulatoryrr
gaming, and sports betting operations, which are subject to extensive state and forff
authorities have broad discretion, and may, forff
icabla e legislation, rulrr es and regulations, limit,
condition, suspend, faff il to renew or revoke a license or registration to conduct our operations or prevent another person frff om
owning an equity interest in the Company.

l wagering, online pari-mutuet

any reason set forff

th in the appl

ovals. The loss of a license in one jurisdiction could trigger the loss of a license or affff eff ct our eligibility forff

ovals
There can be no assurance that we will be abla e to retain our existing governmental licenses, registrations, permits or appr
to operate our existing businesses or demonstrate suitabia lity to obtain any licenses, registrations, permits, or
necessaryrr
appr
a license in
a
another jurisdiction. As we expand our operations in our existing jurisdictions or to new areas, we may have to meet additional
suitabia lity requirements and obtain additional
ovals frff om authorities in these
jurisdictions. The appr

licenses, registrations, permits and appr
.
oval process can be time-consuming and costly, and we cannot be sure that we will be successfulff

oval of legalized pari-mutuet

Our Live and Historical Racing segment is subject to extensive state and local regulation, and we depend on continued state
l wagering in states where we operate. Our wagering and racing (including HRM) faff cilities
appr
a
licenses,
must meet
registrations, permits and appr
operation. However, we may be unabla e to maintain our existing licenses.
The faff ilure to obtain such licenses in the futff urtt e or the loss of or material change in our business licenses, registrations, permits
or appr
ovals may materially limit the number of races we conduct or our racing (including HRM) operation. The loss of a
a
license in one jurisdiction could trigger the loss of a license or affff eff ct our eligibility forff

the licensing requirements of various regulatoryrr
ovals necessaryrr

authorities. We have obtained all governmental

a license in another jurisdiction.

forff

Regulatoryrr
authorities also have input into important aspects of our operations, including hours of operation, location or
relocation of a faff cility, and numbers and types of HRMs. Regulators may also levy substantial fiff nes against or seize our assets
l laws or regulations. For example, individual
or the assets of our subsidiaries or the people involved in violating pari-mutuet
ionality of the Louisiana 2021
plaintiffff sff associated with video poker and trucrr k stops in Louisiana are challenging the constitutt
HHR Act which may adversely impact Fair Ground’s historical racing operations.

TwinSpires accepts ADW wagers frff om customers of certain states who set up and fund
accounts frff om which they may place
wagers via telephone, mobile device or through the Internet pursuant to the Interstate Horseracing Act and relevant licenses and
l wagering varyrr
consents. The online horse racing wagering business is heavily regulated, and laws governing ADW pari-mutuet
frff om state to state. State attorney generals, regulators, and other law enforff cement offff iff cials may interprrr et state laws, feff deral
laws, constitutt

ional principles, and the related regulations in a diffff eff rent manner than we do.

in lobbying state legislaturtt es
States may take affff iff rmative action to make ADW expressly unlawfulff
or regulatoryrr bodies to obtain or renew required legislation, licenses, registrations, permits and appr
to faff cilitate
the operation or expansion of our online horse racing wagering business or in any legal challenge to the validity of any
restrictions on ADW. Legal challenges and regulatoryrr and legislative processes can be lengthy, costly and uncertain.

. We may not be successfulff

ovals necessaryrr

Many states have considered and are considering interactive and Internet gaming legislation and regulations which may inhibit
online wagering. Anti-gaming conclusions and
our abia lity to do business in such states or increase competition forff
recommendations of other governmental or quasi-governmental bodies could forff m the basis forff
new laws, regulations, and
enforff cement policies. The extensive regulation by both state and feff deral authorities of gaming activities also can be
signififf cantly affff eff cted by changes in the political climate and changes in economic and regulatoryrr policies.

Any of these events could have a material adverse impact on our fiff nancial condition, results of operations, and cash flff ows.

Financial Risks

Our debt facff

ilii ill tii itt es contaitt nii

restrtt ictitt ons thtt at lill mii

itii our flff ell xiee bii

lii ill tii ytt

inii operatitt nii g our businii ess

Our debt faff cilities contain a number of covenants that impose signififf cant operating and fiff nancial restrictions on our business,
including restrictions on our abia lity to, among other things, take the folff

lowing actions:

•

incur additional debt or issue certain prefeff rred shares,

pay dividends on or make distributions in respect of our capia tal stock, repurchase common shares or make other
restricted payments,

• make certain investments,

•

sell certain assets or consolidate, merge, sell or otherwise dispose of all or substantially all of our assets,

create liens on certain assets,

enter into certain transactions with our affff iff liates, and

designate our subsidiaries as unrestricted subsidiaries.

As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unabla e to engage
in faff vorabla e business activities or fiff nance futff urtt e operations or capia tal needs.

Anyn faiff
matett riali

lii ure tott complm yll witii htt

thtt e fiff nii anciali
adversrr e imii pacm t on our businii ess

ratitt os and othtt er covenantstt

inii our debt facff

ilii ill tii itt es and othtt er inii debtett dness couldll have a

Under our debt faff cilities, we are required to satisfyff and maintain specififf ed fiff nancial ratios. Our abia lity to meet those fiff nancial
ratios can be affff eff cted by events beyond our control, and as a result, we may be unabla e to meet those ratios. A faff ilure to comply
with the fiff nancial ratios and other covenants contained in our debt faff cilities or our other indebtedness could result in an event of
defaff ult which, if not cured or waived, could have a material adverse impact on our business and fiff nancial condition.
In the
event of any defaff ult under our debt faff cilities or our other indebtedness, the lenders thereunder:

•

will not be required to lend any additional amounts to us,

•

could elect to declare all borrowings outstanding, together with accruerr d and unpaid interest and feff es, to be due and
payabla e and could terminate all commitments to extend furff

ther credit, or

could require us to appl

y all of our availabla e cash to repay these borrowings.

We have pledged a signififf cant portion of our assets as collateral under our debt faff cilities. If any of these lenders accelerate the
repayment of borrowings, we may not have suffff iff cient assets to repay our indebtedness and our lenders could exercise their
rights against the collateral we have granted them

InII creases tott
e tott
may adversrr elyll affff eff ct our businii ess.

inii tett rest ratett s (du((

inii fn lff atll

itt on or othtt erwisii e)e , disii ruptu itt ons inii

thtt e creditii markerr

tstt ,s or changes tott our creditii ratitt nii gs

While we currently generate signififf cant cash flff ows frff om ongoing operations and have access to global credit markets through
our various fiff nancing activities, interest rate increases, disrupt
ion in the credit markets, changes that may result frff om the
implementation of new benchmark rates that replace the London Interbar nk Offff eff red Rate ("LIBOR"), or changes to our credit
ng.
ratings could negatively impact the availabia lity or cost of fundi

During inflff ationaryrr periods, interest rates have historically increased, which would have a direct effff eff ct on the interest expense
of our borrowings. In particular, primarily in response to concerns about
inflff ation, the U.S. Federal Reserve has signififf cantly
rate, which has led to increases in interest rates in the credit markets. The U.S. Federal
raised its benchmark feff deral funds
Reserve may continue to raise the feff deral funds
rate, which will likely lead to higher interest rates in the credit markets and the
possibility of lower asset values, slowing economic growth and/or possibly leading to a recession. We are exposed to increases
in interest rates on our variabla e-rate borrowings, which consist of borrowings under our credit faff cility and our term loans.
Thereforff e, interest rate increases, due to inflff ation or otherwise, could, increase our interest expense under these variabla e-rate
faff cilities in the short-term and increase our fiff nancing costs as we refiff nance our existing variabla e-rate and fiff xed-rate long-term
borrowings in the long term, or we could incur additional interest expense related to the issuance of incremental debt. These
increased costs could reduce our profiff tabia lity, impair our abia lity to meet our debt obligations, negatively impact our abia lity to
maintain compliance with the fiff nancial covenants in our Credit Agreement, or increase the cost of fiff nancing our acquisition,
investment, and development activity.

Reduced access to credit or increased costs could adversely affff eff ct our liquidity and capia tal resources or signififf cantly increase
our cost of capia tal.

Our inii surance coststt may inii crease,e we may not be ablell
which we can recover under our inii surance polill cies forff
inii clell ment weathtt er and casualtll ytt eventstt ,s allll couldll adversrr elyll affff eff ct our businii ess

tott obtaitt nii

simii

inii surance coverage inii
damages sustaitt nii ed at our operatitt nii g propertitt es inii

thtt e fuff ture,e and thtt e extee ett nt tott
thtt e event of

ilii arll

We renew our insurance policies on an annual basis. The cost of coverage may become so high that we may need to furff
reduce our policy limits or agree to certain additional exclusions frff om our coverage.
insurance coverage, we could be at risk forff
other material agreements require us to meet certain standards related to insurance coverage.
suffff iff cient insurance coverage to satisfyff
material agreements.

ther
If we are unabla e to obtain suffff iff cient
ents and
If we are unabla e to obtain
ents or

these requirements, an event of defaff ult could result under these debt instrumrr

increased potential losses, which could be substantial. Our debt instrumrr

Portions of our business are diffff iff cult or impracticabla e to insure. Aftff er carefulff
ly weighing the costs, risks, and benefiff ts of
retaining versus insuring various risks, as well as the availabia lity of certain types of insurance coverage, we may opt to retain
certain risks not covered by our insurance policies. Retained risks are associated with deductible limits or self-ff insured
retentions, partial self-ff insurance programs and insurance policy coverage ceilings.

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Flooding, blizzards, windstorms, earthquakes, hurricanes or other weather conditions could adversely affff eff ct our casino and
horse racing locations. We maintain insurance coverage that may cover certain costs that we incur as a result of some naturt al
disasters, which coverage is subjb ect to deductibles, exclusions and limits on maximum benefiff ts. We may not be abla e to fulff
ly
collect, if at all, on any claims resulting frff om extreme weather conditions or other disasters.
If any of our properties are
damaged or if our operations are disrupt
ed or faff ce prolonged closure as a result of weather conditions in the futff urt e, or if
weather conditions adversely impact general economic or other conditions in the areas in which our properties are located or
frff om which we draw our patrons, the disrupt

ion could have a material adverse impact on our business.

We have "all risk" property insurance coverage forff
our operating properties which covers damage caused by a casualty loss
(such as fiff re, naturt al disasters, acts of war, or terrorism). Our level of property insurance coverage, which is subject to policy
maximum limits and certain exclusions, may not be adequate to cover all losses in the event of a maja or casualty. In addition,
certain casualty events may not be covered at all under our policies. Thereforff e, certain acts could expose us to substantial
uninsured losses. Any losses we incur that are not adequately covered by insurance may decrease our futff urt e operating income,
payment of our obligations.
require us to fund

destroyed property and reduce the funds

replacements or repairs forff

availabla e forff

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

We own the folff

lowing real property:

Live and HiHH sii torical Racing
Kentuctt kykk

•

◦
◦
◦
◦
◦
◦
Virginia
◦
◦
◦

•

100 acres at Churchill Downs and our auxiliaryrr
Derbyr City Gaming in Louisville
Derbyr City Gaming Downtown in Louisville
Oak Grove Racing & Gaming in Southwestern Kentuct ky
Turfwff ay Park in Northern Kentuct ky
Ellis Park Racing & Gaming in Northwestern Kentuct ky

training faff cility at Derbyr City Gaming in Louisville

Colonial Downs Racetrack & Rosie's in New Kent
Rosie's in Vinton
Rosie's in Richmond

Florida - Calder Casino in Miami Gardens
Indiana - Terre Haute Casino Resort in Terre Haute (Opening in 2024)
Iowa - Hard Rock Hotel & Casino in Sioux City
Louisiana - Fair Grounds Race Course & Slots and certain VSI properties in New Orleans

Gaming
•
•
•
•
• Maine - Oxforff d Casino & Hotel in Oxforff d
• Marylrr and - Ocean Downs Casino & Racetrack in Ocean City
• Mississippi - Riverwalk Casino Hotel in Vicksburg
New York - del Lago Resort & Casino in Waterloo
•
Pennsylvania - Presque Isle Downs & Casino in Erie
•

r
All Othett
Illinois - Arlington International Race Course in Arlington Heights - We closed on the sale of the property to the
•
Chicago Bears on Februarr

ryrr 15, 2023.

We lease the folff

lowing real property:

Live and HiHH sii torical Racing
Kentuctt kykk
◦

•

Churchill Downs Racetrack in Louisville - we lease 158 acres under a 30-year lease entered into in 2002
where we transfeff rred title of the faff cility to the City of Louisville, and retained the right to re-acquire the
$1.00, subject to the terms of the lease as part of the fiff nancing of the improvements to
faff cility at any time forff
the faff cility.
Newport Racing & Gaming in Northern Kentuct ky

◦

•
•

New Hampshire - Chasers Poker Room in Salem
Virginia
◦
◦
◦

Rosie's in Collinsville
Rosie's in Hampton
Rosie's in Dumfrff ies

TwTT inSpires

•

•
•
•

Kentuctt kykk
◦
◦

TwinSpires.com and Brisnet offff iff ces in Lexington
TwinSpires and United Tote offff iff ces in Louisville

New Jersey - TwinSpires offff iff ces in Toms River
Califorff nia - United Tote offff iff ces in San Diego
Oregon - United Tote offff iff ces Portland

Gaming
•
• Mississippi - the land and casino forff Harlow's Casino Resort & Spa in Greenville
Pennsylvania - the building forff Lady Luck Casino Nemacolin in Farmington
•

Louisiana - Certain VSI properties in New Orleans

r
All Othett
Kentuctt ky - Corpor
•
Virginia - Corpor
•
ITEM 3.

ate headquarters in Louisville

ate offff iff ce space in Vinton

LEGAL PROCEEDINGS

In addition to the matters described below, we are also involved in ordinaryrr
business.

routine litigation matters which are incidental to our

Bob Baffff eff rt and Bob Baffff eff rt Racinii g StSS abl

ell s,s InII c.cc v.vv ChCC urchilii lll Downs InII corpor

atett d, Bilii lll CarCC srr tantt

jn en and Alell xee Rankinii

ryrr 28, 2022, plaintiffff sff Bob Baffff eff rt and Bob Baffff eff rt Racing Stabla es, Inc. fiff led a complaint and motion forff

preliminaryrr
On Februarr
ated, its Chief Executive Offff iff cer Bill Carstanjen, and its Chairman of the Board of
injunction against Churchill Downs Incorpor
the Western District of Kentuct ky, arising out of the Company’s decision to
Directors Alex Rankin in the U.S. District Court forff
suspend Mr. Baffff eff rt frff om entering horses trained by him at any Company-owned racetrack forff
a period of two years. The
Company’s two-year suspension of Mr. Baffff eff rt came aftff er Baffff eff rt-trained horse, Medina Spirit, fiff nished fiff rst in the 147th
betamethasone, a banned race-day substance. Plaintiffff sff
rr
runni
allege that the Company’s decisions to suspend Mr. Baffff eff rt frff om racing at any Company-owned racetrack and to prohibit
. Plaintiffff sff
horses trained by him (or any other suspended trainer) frff om accumulating Derby-
assert claims forff
t laws, (iv)
(i) violation of the due process clause, (ii) unlawfulff
tortious interfeff rence with contract, and (v) tortious interfeff rence with prospective business advantage.

qualifyiff ng points were unlawfulff
exclusion, (iii) violations of the feff deral antitrusrr

but subsequently tested positive forff

ng of the Kentuct ky Derbyr

ryrr 21, 2022, the Kentuct ky Horse Racing
In addition to and separate frff om the Company’s suspension of Mr. Baffff eff rt, on Februarr
90 days and issued a fiff ne to
Commission ("KHRC") Board of Stewards suspended Mr. Baffff eff rt frff om racing in Kentuct ky forff
him. The KHRC reje ected Mr. Baffff eff rt’s requests to stay the suspension. Mr. Baffff eff rt unsuccessfulff
ly sought judicial intervention
relieving him frff om the KHRC suspension. On March 21, 2022, the Franklin County Circuit Court concluded Mr. Baffff eff rt was
not entitled to a stay of the KHRC suspension and that he had not satisfiff ed a single element required forff
injunction
of the KHRC suspension. This decision was affff iff rmed by the Kentuct ky Court of Appeals on April 1, 2022 in an order denying
emergency relief.ff Aftff er the Kentuctt ky Court of Appeals allowed the KHRC’s 90-day suspension of
Mr. Baffff eff rt’s motion forff
injunction against the Company without
Mr. Baffff eff rt to stand, plaintiffff sff voluntarily withdrew their motion forff
preje udice.

a temporaryrr

preliminaryrr

preliminaryrr
On May 2, 2022, the Company fiff led a motion to dismiss plaintiffff sff ’ complaint. Plaintiffff sff fiff led a renewed motion forff
ryrr 17, 2023, the Court issued a memorandum opinion and order granting the
injunction on December 15, 2022. On Februarr
In the same order, the Court
Company’s motion to dismiss in part, allowing a portion of the due process claim to remain.
denied Plaintiffff sff ’ motion forff
injunction, concluding that Plaintiffff had not establa ished irreparabla e injuryrr and was not
likely to succeed on the merits of the remaining claim. The Company, Mr. Carstanjen, and Mr. Rankin intend to defeff nd this
matter vigorously and believe that there are meritorious legal and faff ctuatt
l defeff nses against plaintiffff sff ' allegations and requests forff
relief.ff

preliminaryrr

ITEM 4.

MINE SAFETY DISCLOSURES

a
Not appl

icabla e.

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PART II

ITEM 5.

MARKET FOR REGISTRARR NT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

MarMM kerr

t forff ComCC mon StSS octt k

The Company's common stock is traded on the Nasdaq Global Select Market under the symbol CHDN. As of Februaryrr 15, 2023,
there were appr

oximately 2,230 shareholders of record.

Dividends

Since joining The Nasdaq Global Select Market in 1993, we have declared and paid cash dividends on an annual basis at the
discretion of our Board of Directors. The payment and amount of futff urtt e dividends will be determined by the Board of
Directors and will depend upon, among other things, our operating results, fiff nancial condition, cash requirements and general
business conditions at the time such payment is considered. We declared a dividend of $0.714 in October 2022, which was paid
in Januaryrr 2023, and we declared a dividend of $0.667 in October 2021, which was paid in Januaryrr 2022.

IsII suer Purchases of ComCC mon StSS octt k

lowing tabla e provides inforff mation with respect to shares of common stock that we repurchased during the quarter ended

The folff
December 31, 2022:

Total Number of
Shares Purchased

Average Price
Paid Per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

Approximate Dollar
Value of Shares That
May Yet Be
Purchased under the
Plans or Programs
(i(( nii milii lll ill ons)s (1)

157,334

22,961

31,230

211,525

202.23

216.35

215.02

205.65

100,435

22,961

23,328

146,724

280.2

275.9

270.2

Period

October 2022

November 2022

December 2022

Total

(1)

On September 29, 2021, the Board of Directors of the Company appr
oved a common stock repurchase program of up to
$500.0 million ("2021 Stock Repurchase Program"). The 2021 Stock Repurchase Program includes and is not in
addition to the unspent amount remaining under the prior 2018 Stock Purchase Program authorization. The repurchase
program has no time limit and may be suspended or discontinued at any time. For more inforff mation, refeff r to Note 10,
Shareholders' Equity, to the notes to consolidated fiff nancial statements included in this Annual Report on Form 10-K.

lowing perforff mance grapha

r Return Perfr orff mance Graph

Shareholdell
The folff
SEC, nor shall such inforff mation be incorpor
Securities Exchange Act of 1934, each as amended, except to the extent we specififf cally incorpor
fiff ling.

and related inforff mation shall not be deemed "soliciting material" nor to be "fiff led" with the
ated by refeff rence into any futff urt e fiff lings under the Securities Act of 1933 or the
ate it by refeff rence into such

lowing grapha

depicts the cumulative total shareholder returt n, assuming reinvestment of dividends, forff

the periods
The folff
indicated forff
our Common Stock compared to the RusRR sell 1000 Index, S&P Midcapa 400 Index, and the S&P 500 Index. During
2021, our Company moved frff om the RusRR sell 2000 Index to the RusRR sell 1000 Index due to our increase in market capia talization.
We now consider the RusRR sell 1000 Index to be our most comparabla e peer group index. We added the S&P Midcapa 400 Index
as a comparison beginning in our Annual Report on Form 10-K forff
the year ended December 31, 2018. The S&P Midcapa 400
Index includes the Company's results and also reflff ects companies which have a more comparabla e market capia talization than the
S&P 500 Index.

$500

$450

$400

$350

$300

s
r
a
l
l
o
D

$250

$200

$150

$100

$50

12/31/17

12/31/18

12/31/19

12/31/20

12/31/21

12/31/22

Period Ending

rr
Churchill Downs Incorpor
S&P Midcapa 400 Index

ated

RusRR sell 1000 Index
S&P 500 Index

12/31/17

12/31/18

12/31/19

12/31/20

12/31/21

12/31/22

Churchill Downs Incorpor

ated

RusRR sell 1000 Index

S&P Midcapa 400 Index
S&P 500 Index

$
$

100.00

100.00
100.00

$
$

105.47

95.22

88.92
95.62

$
$

178.75

125.14

112.21
125.72

$
$

254.61

151.37

127.54
148.85

$
$

315.76

191.42

159.12
191.58

$
$

277.99

154.80

138.34
156.88

ITEM 6.

[RESERVED]

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ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERARR TIONS

folff

lowing disii cussion and analyll syy isii of our consolidated fiff nancial condition and resultstt of operations shouldll be read in
ItII em 8. FiFF nancial
lowing disii cussion provides an analyll syy isii of our resultstt of operations and reasons
ding our fiff nancial condition and resultstt of
year ended

TheTT
conjunction withtt our audited consolidated fiff nancial statementstt and related notes included in Part IIII ,II
Statementstt and Supplementaryrr Data. TheTT
forff material changes thett
operations forff
December 31, 2021, fiff led withtt
Our Business

rein forff
2021 as comparm ed to 2020 isii

2022 as comparm ed to 2021. Disii cussion regar

included in Part IIII ,II ItII em 7 of our Annual Repor

SEC on FeFF bruaryrr 23, 2022.

t on ForFF m 10-K forff

thett

folff

ated ("CDI" or the "Company") has been creating extraordinaryrr entertainment experiences forff

nearly
Churchill Downs Incorpor
150 years, beginning with the Company’s most iconic and enduring asset, the Kentuct ky Derby.
Headquartered in Louisville,
Kentuctt ky, CDI has expanded through the development of live and historical racing entertainment venues, the growth of the
TwinSpires horse racing online wagering business and the operation and development of regional casino gaming properties.

In the fiff rst quarter of 2022, we updated our operating segments to reflff ect the internal management reporting used by our chief
operating decision maker to evaluate results of operations and to assess perforff mance and allocate resources. During the fiff rst
quarter of 2022, our chief operating decision maker decided to include the results of our United Tote business in the TwinSpires
segment as we evolve our strategy to integrate the United Tote offff eff ring with TwinSpires Horse Racing, which we believe will
inforff mation, refeff r to Note 21 - Segment
create additional business-to-business revenue opportuni
Inforff mation, to the notes to consolidated fiff nancial statements included in Item 8. Financial Statements and Supplementaryrr Data
of this Annual Report on Form 10-K.

ties. For additional

2022 TrTT ansactitt ons

Peninsula Pacifi iff c EntEE ertainment Acquisii ition

the Company completed the acquisition of substantially allll

On November 1, 2022,
thhe assets of Peninsula Pacififf c
Entertainment, LLC ("P2E") with a base purchase price of $2.75 billion ("P2E Transaction") subject to working capia tal and
lowing properties as part of the P2E Transaction: Colonial
other purchase price adjustments. The Company acquired the folff
Downs Racetrack ("Colonial Downs") in New Kent, Virginia, six historical racing entertainment venues in Virginia, del Lago
Resort & Casino in Waterloo, New York ("del Lago"), and the Hard Rock Hotel & Casino in Sioux City, Iowa ("Hard Rock
Sioux City"). The P2E Transaction also included development rights forff
two properties currently under development in
Dumfrff ies and Emporia, Virginia with up to fiff ve additional Historical Racing Machines ("HRMs") entertainment venues as well
as ONE Casino and Resort in collabor

ation with Urbar n One.

ChasCC

ersrr Pokekk r Room Acquisii ition

On September 2, 2022, the Company completed the acquisition of Chasers Poker Room ("Chasers") in Salem, New Hampshire
("Chasers Transaction"). Chasers is a charitabla e gaming faff cility located appr
oximately 30 miles frff om Boston, Massachusetts,
that offff eff rs poker and a variety of tabla e games. The Company plans to develop an expanded charitabla e gaming faff cility in Salem
to accommodate HRMs and tabla e games. As part of the Chasers Transaction, the Company made an initial payment to the
sellers forff

rights to operate the poker room and to build a historical racing entertainment venue.

Ellisii Parkrr Acquisii ition

On September 26, 2022, the Company completed the acquisition of Ellis Park Racing & Gaming ("Ellis Park Transaction").
Ellis Park Racing & Gaming ("Ellis Park") is a racetrack and gaming faff cility venue with HRMs. As part of the acquisition, the
Company also acquired the rights to construcrr

t an HRM entertainment venue in Owensboro, Kentuct ky.

CalCC dell

r Land Sale

$291.0 million to
On June 17, 2022, the Company closed on the sale of 115.7 acres of land near Calder Casino ("Calder") forff
io company. The Company received cash proceeds of $279.0 million which
Link Logistics Real Estate, a Blackstone portfolff
was net of $12.0 million of transaction costs. We recognized a gain of $274.6 million on the sale of the land, which is included
in other income in the accompanying Condensed Consolidated Statements of Comprehensive Income (Loss).

ExEE acta Sysyy tems, LLC Acquisii ition

On December 19, 2022, the Company announced that it entered into a defiff nitive agreement under which we would acquire all
the outstanding equity interests of Exacta Systems, LLC ("Exacta") forff
total consideration of $250.0 million in cash (the
"Exacta Transaction"), subject to certain working capia tal and other purchase price adjustments. The Exacta Transaction will
provide the Company the abia lity to realize synergies related to the Company's recent acquisition of the HRM entertainment
venues in Virginia.

Othtt er Businii ess Actitt vitii itt es

ImII paim rment

During the quarter ended December 31, 2022, the Company evaluated whether events or circumstances changed that would
indicate it is more likely than not that any of the Company's intangible assets, goodwill, or property and equipment, were
impaired. Based on the Company's evaluation, the Company concluded that a trigger event forff
impairment testing occurred
related to the Presque Isle Downs and Casino ("Presque Isle") gaming rights, trademark, and the reporting unit's goodwill due to
continued negative economic conditions that negatively impacted the estimates and assumptions utilized in our indefiff nite-lived
intangible asset impairment assessment. As a result of the updated discount rate to reflff ect the increased uncertainty of the cash
flff ows and updated projected cash flff ow stream, the Company recorded a $33.4 million non-cash impairment charge in four
th
quarter of 2022 forff

the Presque Isle gaming rights and trademark.

ExEE it of thett Direct Online Sportstt and CasCC ino Business

In 2022, the Company exited the direct online Sports and Casino business in everyrr
Pennsylvania and Arizona.
During the quarter ended March 31, 2022, the Company evaluated whether this planned exit would indicate it is more likely
than not that any of the Company’s intangible assets, long-lived assets, current assets or property and equipment, were
impaired. Based on the Company’s evaluation, the Company recorded a $4.9 million non-cash impairment charge related to
certain assets in the TwinSpires segment. The Company will maintain its retail Sports operations and has monetized two of its
online market access licenses

state except forff

ImII pacm t of thett COVIVV DII

-19 Global Pandemic

In March 2020, as a result of the COVID-19 outbrt eak, we temporarily suspended operations at our wholly-owned and managed
gaming properties. In May 2020, we began to reopen our properties with patron restrictions and gaming limitations, which
flff uctuatt

ted with the changing environment. All of our gaming properties have remained open since Januaryrr 2021.

The 146th Kentuctt ky Oaks and Derbyr were held in the third quarter of 2020 without spectators. During the second quarter of
city restrictions in compliance with Kentuct ky venue limitations at
2021, we held the 147th Kentuct ky Oaks and Derbyr with capaa
in each year were signififf cantly less than
that time. Due to such restrictions, our revenues frff om the Kentuctt ky Oaks and Derbyr
city
we would otherwise expect. The 148th Kentuctt ky Oaks and Derbyr were held in the second quarter of 2022 without capaa
restrictions.

The extent to which the COVID-19 pandemic, including the emergence of variant strains, will continue to impact the Company
new
remains uncertain and will depend on many faff ctors that are not within our control. We will continue to monitor forff
developments related to the pandemic and assess these developments to maintain continuity in our operations.

Key Indicators to Evaluate Business Results and Financial Condition

Our management monitors a variety of key indicators to evaluate our business results and fiff nancial condition. These indicators
include changes in net revenue, operating expense, operating income, earnings per share, outstanding debt balance, operating
cash flff ow and capia tal spend.

Our consolidated fiff nancial statements have been prepared in conforff mity with U.S. generally accepted accounting principles
taxes, depreciation and
("GAAP"). We also use non-GAAP measures,
amortization) and Adjusted EBITDA. We believe that the use of Adjusted EBITDA as a key perforff mance measure of results of
operations enabla es management and investors to evaluate and compare frff om period to period our operating perforff mance in a
meaningfulff
and consistent manner. Our chief operating decision maker utilizes Adjusted EBITDA to evaluate segment
perforff mance, develop strategy and allocate resources. Adjusted EBITDA is a supplemental measure of our perforff mance that is
not required by, or presented in accordance with, GAAP. Adjusted EBITDA should not be considered as an alternative to, or
more meaningfulff

than, net income (as determined in accordance with GAAP) as a measure of our operating results.

including EBITDA (earnings beforff e interest,

Adjusted EBITDA is defiff ned as earnings beforff e interest, taxes, depreciation and amortization, adjusted forff

the folff

lowing:

Adjusted EBITDA includes our portion of EBITDA frff om our equity investments.

Adjusted EBITDA excludes:

•

Transaction expense, net which includes:

– Acquisition, disposition, and land sale related charges;
– Direct online Sports and Casino business exit costs; and
– Other transaction expense, including legal, accounting and other deal-related expense.

•
•

Stock-based compensation expense;
Rivers Des Plaines' impact on our investments in unconsolidated affff iff liates frff om:

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–

The impact of changes in faff ir value of interest rate swapsa

, and

Legal reserves and transaction costs;

•
•
•

•
•

Asset impairments;
Gain on Calder land sale;
Legal reserves;

Pre-opening expense; and
Other charges, recoveries and expenses

As of December 31, 2021, Arlington International Racecourse ("Arlington") ceased racing and simulcast operations. On
Februarr
ryrr 15, 2023, the Company closed on the sale of the property to the Chicago Bears. For more inforff mation, refeff r to Note
Sale, to the notes to consolidated fiff nancial statements included in this Annual Report on
4, Dispositions and Assets Held forff
Form 10-K. Arlington's operating loss in the current quarter and year is treated as an adjustment to EBITDA and is included in
Other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.

For segment reporting, Adjusted EBITDA includes intercompany revenue and expense totals that are eliminated in the
Consolidated Statements of Comprehensive Income (Loss). See the Reconciliation of Comprehensive Income (Loss) to
Adjusted EBITDA included in this section forff

additional inforff mation.

Business Highlights

In 2022, we delivered strong perforff mance while continuing the execution of several organic investments and completing the
largest acquisition in our Company’s historyrr
that collectively we believe will provide long-term sustainabla e value creation. We
delivered strong growth in net revenue, operating income, net income, and Adjusted EBITDA compared to fiff scal year 2021:

•

Net revenue was $1.8 billion, up $212.6 million or 13%;

Net income was $439.4 million, up $190.3 million or 76%;

Adjusted EBITDA was $763.6 million, up $136.6 million, or 22%; and

Cash frff om continuing operations was $510.8 million, up $51.3 million or 11%.

Live and HiHH sii torical Racing Segme

ent:

•

Adjusted EBITDA was $287.5 million, up $112.5 million or 64% frff om fiff scal year 2021.

Churchill Downs Racetrack:

▪

Derbyr Week successfulff
city at Churchill Downs Racetrack with the 148th Kentuctt ky
Derbyr with over 147,000 faff ns gathered in person to watch the most exciting two minutes in sports on the fiff rst
Saturt day in May.

ly returt ned to fulff

l capaa

▪ We successfulff

ly completed the Homestretch Club prior to the 148th Kentuct ky Derbyr

a
and appr

oximately $8.0

million under budget.

▪ We continued construcrr

in May 2023 and the Paddock Project forff

tion on the new First Turn Experience which will be completed forff
in May 2024.

the 150th Kentuct ky Derbyr

Derbyr

the 149th Kentuct ky

▪ We extended the partnership with Woodforff d Reserve as the Presenting Sponsor forff

the Kentuct ky Derbyr

through 2027.

Derbyr City Gaming delivered record net revenue and Adjusted EBITDA. We continued construcrr
flff oor expansion and new fiff ve-storyrr hotel.

tion of the gaming

Oak Grove delivered record net revenue and Adjusted EBITDA.

• We celebrated the opening of the new HRM entertainment venue and racetrack faff cility at Turfwff ay Park in September

2022.

• We began construcrr

tion of Derbyr

City Gaming Downtown in Louisville, Kentuct ky as a new HRM entertainment

venue.

• We completed the acquisition of Chasers in Salem, New Hampshire on September 2, 2022, which will enabla e the

Company to expand its HRM strategy with tabla e games to the New England market.

• We completed the acquisition of Ellis Park in Henderson, Kentuct ky in September 2022 including the rights to build an

HRM entertainment venue in Owensboro, Kentuct ky.

TwTT inSpires Segme

ent:

•

Adjusted EBITDA was $114.1 million, up $31.4 million or 38% frff om fiff scal year 2021.

• We announced a multi-year agreement with FanDuel to enabla e FanDuel to create a fulff

ly integrated and seamless
their customers who want to bet on sports and on horse racing with

wagering experience with a single wallet forff
FanDuel TV driving ongoing engagement beginning in Januaryrr 2023.

• We announced a multi-year agreement with Draftff Kings to provide ADW technology and other services.

• We announced the exit of the Online Sports & Casino business in Februarr

ryrr 2022 and ceased online wagering in

Tennessee, Colorado, Indiana, New Jersey, and Michigan.

• We have executed strategic market access agreements with Bet365 in Pennsylvania and with Golden Nugget in

Indiana to monetize our online wagering skins.

Gaming

•

The Gaming Segment delivered a record $421.9 million of Adjd usted EBITDA, an increase of $10.0 million or 2.4%
frff om fiff scal year 2021.

• We generated wholly-owned same-store casino margins of 34.5% in 2022, down 2.0 basis points frff om 2021 and 5.8

basis points higher than 2019.

•

Rivers Des Plaines completed their $90 million gaming flff oor expansion in April 2022 which added 725 gaming
positions, a 24-tabla e poker room and additional amenities.

• We began construcrr

tion of a $290 million casino, hotel, and entertainment venue in Terre Haute, Indiana.

• We completed the sale of 115.7 acres of land near Calder forff

$291.0 million or appr

Link Logistics Real Estate on June 17, 2022. We also executed a §1031 transaction to defeff r appr
million of taxes related to the sale of the land.

oximately $2.5 million per acre to
oximately $76.0

EnvEE ironmental,l Social,l and Governance

• We expanded our ESG effff orff

ts including the ongoing promotion of responsible gaming; initiatives at our properties to
emissions, and to responsibly manage waste; increasing investments
lessen energy and water usage, to decrease carbon
in the communities in which we operate and supporting our teams through educational and leadership development;
and furff

ther diversififf cation of our Board of Directors and increasing engagement with our shareholders.

• We continued our diversity, equity, and inclusion initiatives (DE&I) including the roll-out of our mission, vision,

culturtt e statement, and core values company-wide.

r
All Othett

• We closed the sale of our Arlington Heights, Illinois property to the Chicago Bears forff

$197.2 million on Februarr

ryrr 15,

2023.

• We completed the acquisition of substantially all the assets of P2E with a base purchase price of $2.75 billion on
November 1, 2022. The P2E assets acquired included Colonial Downs and six HRM entertainment venues in Virginia,
del Lago in New York, and Hard Rock Sioux City, as well as the development rights forff Dumfrff ies and Emporia HRM
faff cilities in Virginia, up to fiff ve additional HRM entertainment venues in Virginia, and ONE Casino & Resort in
Virginia in collabor

ation with Urbar n One.

▪ We completed the fiff nancing forff

the acquisition in April 2022 by closing a $1.2 billion Senior Secured
Revolver due 2027, $800 million of Senior Secured Delayed Draw Term Loan A due 2027, and $1.2 billion
of Senior Notes due 2030 at a 5.75% interest rate.

• We announced a defiff nitive agreement to acquire Exacta forff

$250.0 million. The acquisition will provide the Company

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the opportuni

ty to realize additional synergies related to our recent acquisition of the P2E HRM assets in Virginia.

The Company’s total shareholder returt n was (12)% forff
500. The Company’s fiff ve-year total shareholder returtt n forff
the S&P 500. The preceding shareholder returtt n calculations assume dividends are reinvested.

2022 compared to (19)% forff

2022 was 178% compared to 55% forff

the RusRR sell 1000 and (18)% forff

the S&P
the RusRR sell 1000 and 57% forff

We remain committed to delivering strong fiff nancial results and long-term sustainabla e growth. Our businesses generate strong
cash flff ow and we have a solid balance sheet that supports our organic growth as well as strategic acquisitions that we believe
will create long-term value forff

our shareholders.

Our Operations

We manage our operations through three reportabla e segments: Live and Historical Racing, TwinSpires, and Gaming.

Refeff r to Part I, Item 1. Business, of this Annual Report on Form 10-K forff more inforff mation on our segments and a description
of our competition and government regulations and potential legislative changes that affff eff ct our business.

Consolidated Financial Results

lowing tabla e reflff ects our net revenue, operating income, net income, Adjusted EBITDA, and certain other fiff nancial

The folff
inforff mation:

(i(( n millions)s
Net revenue
Operating income

Operating income margin
Net income frff om continuing operations
Adjusted EBITDA

Years Ended December 31,

2022

1,809.8

321.8
17.8 %
439.4

763.6

2021

1,597.2

284.4
17.8 %
249.1

627.0

Change

212.6

37.4

190.3

136.6

YeYY ar EnEE ded December 31, 2022 ComCC parm ed tott

thtt e YeYY ar EnEE ded December 31, 2021

•

ng of the 2022 Kentuct ky Derbyr without capaa

Net revenue increased $212.6 million driven by a $205.5 million increase frff om Live and Historical Racing primarily
due to revenue attributabla e to the Virginia properties acquired in the P2E, Ellis Park and Chasers Transactions, the
runni
city restrictions that were in place in 2021, and continued growth at
rr
City Gaming and a $60.5 million increase frff om Gaming primarily due to our
our Oak Grove property and at Derbyr
New York and Iowa properties acquired in the P2E Transaction and increased revenue in Maine, Florida, and
Marylrr and as a result of certain capaa
city restrictions during the fiff rst half of 2021 that did not recur. Partially offff sff etting
these increases were a $15.0 million decrease in TwinSpires primarily due to a decrease in Horse Racing as a higher
portion of our patrons returt ned to wagering at brick-and-mortar faff cilities instead of wagering online and the exit of our
direct online Sports and Casino business in the fiff rst quarter of 2022 and a $38.4 million decrease frff om All Other,
primarily due to Arlington not conducting live racing and simulcast during 2022.

Operating income increased $37.4 million due to a $93.5 million increase in Live and Historical Racing primarily due
ng of the 2022 Kentuct ky Derbyr without restrictions, increases in revenue at our historical racing faff cilities
rr
to the runni
in Kentuct ky, and the incremental revenue frff om the acquired properties in Virginia, and a $37.2 million increase in
TwinSpires driven by decreased online marketing and promotions expense. Partially offff sff etting these increases were a
$34.2 million increase in transaction expense driven by the P2E Transaction, a $25.7 million increase in selling,
ate compensation related expenses, legal feff es, and
general and administrative expenses due to an increase in Corpor
charitabla e donations, a $23.0 million increase in asset impairments, a decrease of $9.3 million in All Other due to
Arlington not conducting live racing in 2022, and a $1.1 million decrease in Gaming.

lowing items impacted comparabia lity of the
Net income frff om continuing operations increased $190.3 million. The folff
the year ended December 31, 2022 compared to the prior year: a
Company's net income frff om continuing operations forff
$198.7 million non-cash aftff er tax gain on the sale of Calder assets and a $6.5 million aftff er tax decrease in expense
related to Rivers Des Plaines' legal reserves and transaction costs. Offff sff etting these increases in net income were a
$17.8 million non-cash aftff er-tax increase in asset impairments; a $35.5 million aftff er-tax increase in transaction, pre-
opening and other expenses, net, a $2.8 million aftff er-tax increase in legal reserves, and $0.7 million of other charges.
Excluding these items, net income increased $41.8 million primarily due to a $63.5 million aftff er-tax increase driven by
the results of our operations and equity in income frff om our unconsolidated affff iff liates, partially offff sff et by a $21.7 million
aftff er-tax increase in interest expense associated with higher outstanding debt balances.

Adjusted EBITDA increased $136.6 million driven by a $112.5 million increase frff om Live and Historical Racing
primarily due to an increase attributabla e to the Virginia properties acquired in the P2E, Ellis Park and Chasers
Transactions, an increase due to the runni
city restrictions that were in
place in 2021, and continued growth at our Oak Grove property and at Derbyr City Gaming, a $31.4 million increase
frff om TwinSpires primarily due to a decrease in marketing spend as a result of exiting the Sports and Casino business,
and a $10.0 million increase frff om Gaming driven by an increase in New York and Iowa frff om the properties acquired

ng of the 2022 Kentuctt ky Derbyr without capaa

as part of the P2E Transaction and an increase primarily frff om our properties in Maine, Florida, and Louisiana as a
result of capaa
city restrictions in 2021 that did not recur. These increases were partially offff sff et by declines in
Mississippi and Pennsylvania driven by the current economic faff ctors and a $17.3 million decline in All Other
primarily due to Arlington not conducting live racing and simulcast operations in 2022.

Revenue by Segment

The folff

lowing tabla e presents net revenue forff

our segments, including intercompany revenues:

(i(( n millions)s
Live and Historical Racing
TwinSpires
Gaming
All Other
Eliminations
Net Revenue

Years Ended December 31,

2022

2021

Change

646.4

430.6

441.6
761.8

3.3
(43.3)
1,809.8

457.8
698.4

49.2
(38.8)
1,597.2

215.8

(16.2)
63.4

(45.9)
(4.5)
212.6

YeYY ar EnEE ded December 31, 2022 ComCC parm ed tott

thtt e YeYY ar EnEE ded December 31, 2021

•

Live and Historical Racing revenue forff
2022 increased $215.8 million primarily due to $62.4 million in revenue
attributabla e to the Virginia properties acquired in the P2E Transaction, $8.0 million in revenue attributabla e to
properties acquired in the Ellis Park and Chasers Transactions, $77.6 million increased revenue at Churchill Downs
city restrictions that were in place in
Racetrack primarily due to the runni
ng of the 2022 Kentuct ky Derbyr without capaa
2021, and $67.8 million increase driven primarily by growth at our Oak Grove property and Derbyr
City Gaming as
well as the opening of Turfwff ay Park in September 2022.

l handle as a higher portion of
TwinSpires revenue decreased $16.2 million primarily due to a decrease in pari-mutuet
our patrons returt ned to wagering at brick-and-mortar faff cilities instead of wagering online and the decision to exit the
direct online Sports and Casino business in the fiff rst quarter of 2022.
Gaming revenue increased $63.4 million primarily due to $46.5 million attributabla e to our New York and Iowa
properties acquired in the P2E Transaction, $25.5 million in Maine, Florida, and Marylrr and as a result of certain
capaa
city restrictions during the fiff rst half of 2021 and a $9.7 million increase in Louisiana as a result of the 2022 Jazz
Festival that was not held in the prior year due to COVID-19 and shutdowns in 2021 due to Hurricane Ida that did not
recur. Partially offff sff etting these increases was a decrease of $18.3 million primarily frff om our Mississippi and
Pennsylvania properties due to the current economic conditions.

All Other revenue decreased $45.9 million primarily as a result of Arlington ceasing racing and simulcast operations at
the end of 2021.

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Consolidated Operating Expense

The folff

lowing tabla e is a summaryrr of our consolidated operating expense:

(i(( n millions)s

Taxes and purses
Content expense
Salaries and benefiff ts

Selling, general and administrative expense
Depreciation and amortization

Marketing and advertising expense
Asset impairments
Transaction expense
Other operating expense
Total expense
Percent of revenue

Years Ended December 31,

2022

2021

Change

473.7
173.7
196.0

164.2
113.7

52.9
38.3
42.1
233.4
1,488.0

82 %

434.5
182.6
170.3

138.5
103.2

74.5
15.3

7.9

186.0
1,312.8

82 %

39.2
(8.9)
25.7

25.7
10.5

(21.6)
23.0
34.2
47.4
175.2

YeYY ar EnEE ded December 31, 2022 ComCC parm ed tott

thtt e YeYY ar EnEE ded December 31, 2021

Signififf cant items affff eff cting comparabia lity of consolidated operating expense include:

•

The additional properties acquired as part of the P2E, Ellis Park and Chasers Transactions drove increases in taxes and
purses, salaries and benefiff ts, selling, general and administrative and other operating expenses.

In May 2022, we ran the Kentuctt ky Derbyr without capaa
and other operating expenses.

city restrictions which drove increases in salaries and benefiff ts

In addition to the impacts frff om the acquisitions, Corpor
donations also contributed to increases in selling, general and administrative expenses.

ate compensation related expenses, legal feff es, and charitabla e

The decline of $21.6 million in marketing and advertising expense was ppriimariillyy ddue to ddecreasedd
lonliine markketii gng byby
lonliine Sports a dnd Casiino bbusiiness.
our TwiinS ipires Sports a dnd Casiino bbusiiness ddue to thhe ddeciisiion to e ixit thhe didirect
Thihis ddecrease was partiiallllyy offff sff et byby iincreasedd markketii gng spe dnd at thhe Kentuct kyky HRM propertiies iin our Liive a dnd
Hiistoriicall Racii gng seggment.

The increase in asset impairments was driven by a $33.4 million non-cash impairment charge at Presque Isle.

Transaction expense increased $34.2 million due to the P2E, Ellis Park, and Chasers Transactions.

Adjd usted EBITDA by Segment

We believe that the use of Adjusted EBITDA as a key perforff mance measure of the results of operations enabla es management
and consistent manner.
and investors to evaluate and compare frff om period to period our operating perforff mance in a meaningfulff
Adjusted EBITDA is a supplemental measure of our perforff mance that is not required by or presented in accordance with
GAAP. Adjusted EBITDA should not be considered as an alternative to, or more meaningfulff
than, net income (as determined
in accordance with GAAP) as a measure of our operating results.

(i(( n millions)s

Live and Historical Racing
TwinSpires
Gaming

Total segment Adjusted EBITDA

All Other

Total Adjusted EBITDA

Year Ended December 31,
2021
2022

Change

287.5
114.1
421.9
823.5
(59.9)
763.6

175.0
82.7
411.9
669.6
(42.6)
627.0

112.5
31.4
10.0
153.9
(17.3)
136.6

YeYY ar EnEE ded December 31, 2022 ComCC parm ed tott

thtt e YeYY ar EnEE ded December 31, 2021

•

Live and Historical Racing Adjusted EBITDA increased $112.5 million due to a $30.1 million increase attributabla e to
the Virginia properties acquired in the P2E Transaction, a $0.7 million increase attributabla e to properties acquired in
the Ellis Park and Chasers Transactions, a $59.1 million increase at Churchill Downs Racetrack primarily due to the
runni
city restrictions that were in place in 2021, and a $22.6 million
rr
increase primarily due to the continued growth at our Oak Grove property and at Derbyr City Gaming.

ng of the 2022 Kentuct ky Derbyr without capaa

TwinSpires Adjusted EBITDA increased $31.4 million primarily due to a $40.0 million increase frff om our Sports and
Casino business primarily due to decreased marketing and promotional activities and an $8.6 million decrease
attributabla e to lower Horse Racing net revenue.

Gaming Adjusted EBITDA increased $10.0 million driven by a $17.9 million increase in New York and Iowa frff om the
properties acquired as part of the P2E Transaction, an $11.6 million increase primarily frff om our properties in Maine,
Florida, and Louisiana as a result of capaa
city restrictions in 2021 that did not recur, and a $2.8 million increase frff om
our equity investments. Partially offff sff etting these increases was a decrease of $22.3 million primarily frff om our
Mississippi and Pennsylvania properties due to the current economic conditions.

All Other Adjusted EBITDA decreased $17.3 million primarily due to the elimination of the $9.7 million operating
income related to Arlington as a result of ceasing racing and simulcast operations at the end of 2021 and a $7.6 million
increase in Corpor

ate compensation related expenses, legal feff es, and charitabla e donations.

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Reconciliation of Comprehensive Income to Adjd usted EBITDA

(i(( n millions)s

Net income and comprehensive income attributable to
Churchill Downs Incorporated

Net loss attributabla e to noncontrolling interest

Net income

Loss frff om discontinued operations, net of tax

Income frff om continuing operations, net of tax
Additions:

Depreciation and amortization
Interest expense
Income tax provision

EBITDA

Adjustments to EBITDA:

Selling, general and administrative:

Stock-based compensation expense

Legal reserves

Other charges

Pre-opening expense and other expense

Other income, expense:

Interest, depreciation and amortization expense related to
equity investments
Changes in faff ir value of Rivers Des Plaines' interest rate
swapsa
Rivers Des Plaines' legal reserves and transactions costs

Other charges and recoveries, net

Gain on Calder land sale
Transaction expense, net

Asset impairments

Total adjustments to EBITDA

Adjd usted EBITDA

Consolidated Balance Sheet

The folff

lowing tabla e is a summaryrr of our overall fiff nancial position:

(i(( n billions)s
Total assets
Total liabia lities
Total shareholders’ equity

Years Ended December 31,

2022

2021

Change

439.4
—
439.4
—

439.4

113.7
147.3
169.4

249.1
—
249.1
—

249.1

103.2
84.7
94.5

869.8

531.5

31.8

27.8

3.8

7.4

13.2

42.8

(12.6)

0.6

1.0

(274.6)

42.1

38.3

(106.2)

763.6

—

0.2

5.8

41.5

(12.9)

9.9

—

7.9

15.3

95.5

627.0

190.3
—
190.3
—

190.3

10.5
62.6
74.9

338.3

4.0

3.8

7.2

7.4

1.3

0.3

(9.3)

1.0

(274.6)

34.2

23.0

(201.7)

136.6

As of December 31,

2022

2021

Change

6.2
5.6

0.6

3.0
2.7

0.3

3.2
2.9

0.3

•

Total assets increased $3.2 billion driven by a $2.4 billion increase in goodwill and other intangibles frff om the P2E,
Ellis Park and Chasers Transactions and a $1.0 billion increase in property and equipment, net frff om the P2E and Ellis
tion projects. Partially offff sff etting these increases was a $0.2 billion decrease in cash and
Park Transactions and construcrr
cash equivalents due to outflff ows forff
tion
bond and term loan interest, capia tal expenditurt es related to ongoing construcrr
projects and payments forff

the purchases of Ellis Park and Chasers.

Total liabia lities increased $2.9 billion driven by a $1.2 billion increase in notes payabla e, net of debt issuance costs,
related to the closing of the 2030 Senior Notes, a $1.4 billion increase in long-term debt, driven by the P2E

Transaction, a $0.2 billion increase in liabia lities assumed as part of the P2E, Ellis Park and Chasers Transactions, and
an increase in defeff rred income taxes.

•

Total shareholders’ equity increased $0.3 billion driven by net income of $0.4 billion, partially offff sff etting this increase
was $0.1 billion of primarily stock repurchases, and taxes paid related to net share settlement of stock awards.

Liquidity and Capital Resources

Our primaryrr sources of liquidity and capia tal resources have been and will continue to be cash flff ow frff om operations, borrowings
under our credit faff cility, and proceeds frff om the issuance of debt securities. Our ongoing liquidity will depend on a number of
faff ctors,
ng of
construcrr

including availabla e cash resources, cash flff ow frff om operations, acquisitions or equity investments, fundi
tion forff

development projects, and our compliance with our covenants under our credit faff cility.

The folff

lowing tabla e is a summaryrr of our liquidity and cash flff ows:

(i(( n billions)s

Cash Flows frff om:

Operating activities
Investing activities
Financing activities

OpeO rating CasCC h FlFF ow

Year Ended December 31,
2021
2022

Change

0.5
(3.1)
2.4

0.5
(0.1)
—

—
(3.0)
2.4

ioviddedd byby operatii gng actii ivitiies iincreasedd frff om iincreasedd operatii gng iincome, iincreasedd didistriibbutiions frff om uncons loliiddatedd
Cashh pr
iin thhe current yyear ddriiven byby priior yyears' tax returtt n llosses. Thhese iincreases were partiiallllyy offff sff et byby an
ff
affff iiff lliiates, a dnd tax ref
iincrease iin net iinterest paiidd a dnd transactiion costs paiidd as part of thhe P2E Transactiion a dnd othher operatii gng expenses. We
antiiciipate thhat cashh fllff ows frff om operatiions over thhe next twellve monthhs wiillll bbe addequate to f
our bbusiiness operatiions a dnd
ff
ca ipia tall expe dinditurt es.

dunds

dund

InvII

esting CasCC h FlFF ow

Cashh usedd iin iinvestii gng actii ivitiies iincreasedd $$3.0 bibilllliion ddriiven priimariillyy byby $$3.0 bibilllliion usedd forff
thhe P2E, Elllliis Parkk a dnd Chhasers
Transactiions, iincreasedd ca ipia tall maiintenance expe dinditurtt es of $$0.3 bibilllliion, partiiallllyy offff sff et byby proceedds frff om thhe Calldder lla dnd salle
of $$0.3 bibilllliion.

FiFF nancing CasCC h FlFF ow

ioviddedd byby fiiff nancii gng actii ivitiies iincreasedd $$2.4 bibilllliion priimariillyy ddriiven byby a $$2.3 bibilllliion iincrease iin net bborrowii gngs frff om

Cashh pr
ll gong-term ddebbt a dnd a $$0.1 bibilllliion ddecrease iin common stockk repurchhases.

CapiCC tii altt ExpeEE

nditii ures

Included in cash flff ows frff om investing activities are capia tal maintenance expenditurtt es and capia tal project expenditurtt es. Capia tal
maintenance expenditurt es relate to the replacement of existing fiff xed assets with a usefulff
lifeff greater than one year that are
obsolete, exhausted, or no longer cost effff eff ctive to repair. Capia tal project expenditurt es represent fiff xed asset additions related to
land or building improvements to new or existing assets or purchases of new (non-replacement) equipment or softff ware related
to specififf c projects deemed necessaryrr expenditurt es.

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We have announced several project capia tal investments, including the folff
lowing: Churchill Downs Racetrack First Turn
Experience and the Paddock Project, the Derbyr City Gaming Expansion and Hotel, Derbyr City Gaming Downtown, the Ellis
Park HRM faff cility in Owensboro, Kentuct ky, the Terre Haute Casino Resort, a New Hampshire HRM Facility, the Virginia
HRM entertainment venues in Dumfrff ies and Emporia, and HRMs in our Louisiana OTBs. We currently expect our project
capia tal to be appr
signififf cantly based on the timing of
work completed, unanticipated delays, and timing of payments to third parties.

oximately $575 to $675 million in 2023, although this amount may varyrr

CComCC mon SStSS octt kk Repuee

rchhase PrPP oggro am

On September 29, 2021, the Board of Directors of the Company appr
oved a common stock repurchase program of up to $500.0
million ("2021 Stock Repurchase Program"). The 2021 Stock Repurchase Program includes and is not in addition to the
unspent amount remaining under the prior 2018 Stock Purchase Program authorization. Repurchases may be made at
management’s discretion frff om time to time on the open market (either with or without a 10b5-1 plan) or through privately
negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. We had
$270.2 million of repurchase authority remaining under this program on December 31, 2022.

DDiiviiddendds

oved an annual cash dividend on our common stock of $0.714 per
On October 25, 2022, the Company's Board of Directors appr
outstanding share, which represented a 7% increase over the prior year. The dividend was payabla e on Januaryrr 6, 2023 to
shareholders of record as of the close of business on December 2, 2022. The 7% increase marked the 12th consecutive year that
the Company has increased the dividend. The payment and amount of futff urtt e dividends will be determined by the Board of
Directors and will depend upon, among other things, our operating results, fiff nancial condition, cash requirements and general
business conditions at the time such payment is considered.

CrCC editii FacFF ilii ill tii itt es and InII debtett dness

The folff

lowing tabla e presents our debt outstanding, bond premium and debt issuance costs:

(i(( n millions)s

Term Loan B due 2024
Term Loan B-1 due 2028
Term Loan A due 2027
Revolver
2027 Senior Notes
2028 Senior Notes

2030 Senior Notes

Total debt

Current maturt

ities of long-term debt

Total debt, net of current maturt

ities

Issuance cost and feff es

Total debt

CrCC editii Agreement

As of December 31,

2022

2021

Change

380.0
294.7
800.0
664.1

600.0
700.0

1,200.0

4,638.8

47.0

4,591.8

(33.1)

384.0
297.8
—
—

600.0
700.0

—

1,981.8

7.0

1,974.8

(13.8)

4,558.7

1,961.0

(4.0)
(3.1)
800.0
664.1

—
—

1,200.0

2,657.0

40.0

2,617.0

(19.3)

2,597.7

On December 27, 2017, we entered into a senior secured credit agreement ("2017 Credit Agreement") with a syndicate of
lenders. The 2017 Credit Agreement provided forff
a $700.0 million senior secured revolving credit faff cility due 2024 (the
Included in the maximum
"Revolver") and a $400.0 million senior secured term loan B due 2024 (the "Term Loan B").
borrowing of $700.0 million under the Revolver was a letter of credit sub faff cility not to exceed $50.0 million and a swing line
commitment up to a maximum principal amount of $50.0 million.

The Term Loan B bears interest at LIBOR plus 200 basis points and requires quarterly payments of 0.25% of the original
$400.0 million balance, or $1.0 million per quarter. The Term Loan B may be subject to additional mandatoryrr prepayment
frff om excess cash flff ow on an annual basis per the provisions of the 2017 Credit Agreement. The Company is required to pay a
commitment feff e on the unused portion of the Revolver as determined by a pricing grid based on the consolidated total net
secured leverage ratio of the Company. For the period ended December 31, 2022, the Company's commitment feff e rate was
0.175%.

On March 17, 2021, the Company entered into the Incremental Joinder Agreement No. 1 (the "Joinder") to its 2017 Credit
Agreement which provided $300.0 million in New Term Loan Commitments ("Term Loan B-1") as a new tranche of term loans
ity date of March 17,
under the existing 2017 Credit Agreement (as conforff med to recognize the new loan) and carries a maturt
2028.

The Term Loan B-1 bears interest at LIBOR plus 200 basis points and requires quarterly payments of 0.25% of the original
$300.0 million balance. The Term Loan B-1 may be subject to additional mandatoryrr prepayment frff om excess cash flff ow on an
annual basis per the provisions of the 2017 Credit Agreement.

On April 13, 2022, the Company amended the 2017 Credit Agreement (as amended, the "Credit Agreement") to extend the
maturtt
ity date of its existing Revolver to April 13, 2027, to increase the commitments under the existing Revolver frff om
$700.0 million to $1.2 billion, and to increase the swing line commitment frff om $50.0 million to $100.0 million. The
a senior secured Delayed Draw Term Loan A due April 13, 2027 in the amount of $800.0 million,
amendment also provides forff
which was drawn on November 1, 2022 as part of the fiff nancing forff
the P2E Transaction. For more inforff mation regarding the
P2E Transaction, refeff r to Note 3, Acquisitions,
to the notes to consolidated fiff nancial statements included in Item 8. Financial
Statements and Supplementaryrr Data of this Annual Report on Form 10-K.

The Revolver and Delayed Draw Term Loan A bear interest at the Secured Overnight Financing Rate ("SOFR") plus 10 basis
points, plus a variabla e appl
icabla e margin which is determined by the Company's net leverage ratio. As of December 31, 2022,
icabla e margin was 125 basis points which was based on the pricing grid in the Credit Agreement. During 2022, we
a
that appl
have borrowed $664.1 million on our Revolver which provided the Company with fiff nancing forff
the Chasers, Ellis Park, and
P2E Transactions. For more regarding the Chasers, Ellis Park and P2E Transactions, refeff r to Note 3, Acquisitions, to the notes
to consolidated fiff nancial statements included in Item 8. Financial Statements and Supplementaryrr Data of this Annual Report on
city, aftff er consideration of $11.1 million in outstanding
Form 10-K. The Company had $524.8 million availabla e borrowing capaa
letters of credit, under the Revolver as of December 31, 2022.

June 30, 2023. The Credit Agreement includes a general
The phase-out of LIBOR forff
process forff
establa ishing an alternative refeff rence rate to the extent LIBOR is phased out. The Company is in the process of
transitioning its fiff nancing frff om LIBOR to alternative refeff rence rates. These transition activities are not expected to have a
material impact on the Company’s fiff nancial statements.

existing debt agreements is set forff

The Credit Agreement is collateralized by substantially all the wholly-owned assets of the Company. The Credit Agreement
contains certain customaryrr affff iff rmative and negative covenants, which include limitations on liens, investments, indebtedness,
dispositions, mergers and acquisitions, the making of restricted payments, changes in the naturtt e of business, changes in fiff scal
year, and transactions with affff iff liates. The Credit Agreement also contains fiff nancial covenants providing forff
the maintenance of
a maximum consolidated secured net leverage ratio and maintenance of a minimum consolidated interest coverage ratio.

Interest coverage ratio

Consolidated total secured net leverage ratio

Actuat

l as of

December 31, 2022

6.6 to 1.0

0.9 to 1.0

Requirement

> 2.5 to 1.0

< 4.0 to 1.0

The Company was compliant with all appl

icabla e covenants on December 31, 2022.

2027 SeSS nior NotNN ett s

tee. The Company may redeem some or all of the 2027 Senior Notes at any time at redemption prices set forff

The 2027 Senior Notes were issued pursuant to an indenturtt e, dated March 25, 2019 (the "2027 Indenturt e"), among the
Company, certain subsidiaries of the Company as guarantors (the "2027 Guarantors"), and U.S. Bank National Association, as
trusrr
th in the 2027
Indenturt e. The terms of the 2027 Indenturt e, among other things, limit the abia lity of the Company to: (i) incur additional debt
and issue prefeff rred stock, (ii) pay dividends or make other restricted payments, (iii) make certain investments, (iv) create liens,
(v) allow restrictions on the abia lity of certain of our subsidiaries to pay dividends or make other payments, (vi) sell assets, (vii)
merge or consolidate with other entities, and (viii) enter into transactions with affff iff liates.

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

2028 SeSS nior NotNN ett s

On December 27, 2017, we completed an offff eff ring of $500.0 million in aggregate principal amount of 4.75% Senior Unsecured
Notes that maturt e on Januaryrr 15, 2028 (the "Existing 2028 Notes") in a private offff eff ring to qualififf ed instituttt
ional buyers
pursuant to RulRR e 144A that is exempt frff om registration under the Securities Act, and to certain non-U.S. persons in accordance
with Regulation S under the Securities Act. The Existing 2028 Notes were issued at par, with interest payabla e on Januaryrr 15th
and July 15th of each year, commencing on July 15, 2018. The Company used the net proceeds frff om the offff eff ring to repay a
portion of our $600.0 million 5.375% Senior Unsecured Notes due in 2021.

On March 17, 2021, the Company completed an offff eff ring of $200.0 million in aggregate principal amount of 4.75% Senior
Unsecured Notes that maturt e on Januaryrr 15, 2028 (the "Additional 2028 Notes") in a private offff eff ring to qualififf ed institutt
ional
buyers pursuant to RulRR e 144A that is exempt frff om registration under the Securities Act, and to certain non-U.S. persons in
accordance with Regulation S under the Securities Act. The Additional 2028 Notes were offff eff red under the indenturt e dated as
of December 27, 2017, governing the $500.0 million aggregate principal amount of 4.75% Senior Unsecured Notes due 2028
and forff m a part of the same series forff
es of the indenturt e. Upon completion of this offff eff ring, the aggregate principal
amount outstanding of the Existing 2028 Notes, together with the Additional 2028 Notes (collectively, the "2028 Senior
Notes"), is $700.0 million.

rr
purpos

Notes will vote as one class under the indenturt e governing the 2028 Senior Notes. The 3.25% premium is being amortized
through interest expense, net over the term of the Additional 2028 Notes.

The Company used the net proceeds frff om the Additional 2028 Notes and the Term Loan B-1: (i) to repay indebtedness
outstanding under our Revolver, (ii) to fundff
related transaction feff es and expenses, and (iii) forff working capia tal and other
general corpor

ate purpos

es.

tee. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forff

The 2028 Senior Notes were issued pursuant to an indenturt e, dated December 27, 2017 (the "2028 Indenturt e"), among the
Company, certain subsidiaries of the Company as guarantors (the "2028 Guarantors"), and U.S. Bank National Association, as
trusrr
th in the 2028 Indenturtt e. The
terms of the 2028 Indenturt e, among other things, limit the abia lity of the Company to: (i) incur additional debt and issue
prefeff rred stock, (ii) pay dividends or make other restricted payments, (iii) make certain investments, (iv) create liens, (v) allow
restrictions on the abia lity of certain of our subsidiaries to pay dividends or make other payments, (vi) sell assets, (vii) merge or
consolidate with other entities, and (viii) enter into transactions with affff iff liates.

2030 SeSS nior NotNN ett s

On April 13, 2022, a wholly-owned subsidiaryrr of the Company completed an offff eff ring of $1.2 billion in aggregate principal
amount of 5.75% Senior Unsecured Notes that maturt e on April 13, 2030 (the "2030 Senior Notes") in a private offff eff ring to
qualififf ed institutt
ional buyers pursuant to RulRR e 144A that was exempt frff om registration under the Securities Act, and to certain
non-U.S. persons in accordance with Regulation S under the Securities Act. The offff eff ring of the 2030 Senior Notes was part of
the P2E Transaction. The Company held the net proceeds of this transaction of $1.2 billion in escrow
the fiff nancing utilized forff
until the proceeds were utilized to complete the P2E Transaction on November 1, 2022, at which time CDI assumed the
obligation and became the Issuer.

Thhe 2030 Se inior Notes were iissuedd at 100% of thhe priinciipall amount,
lplus iinterest ddeemedd to hhave accruerr dd frff om Apriill 13, 2022,
wiithh iinterest payyablbla e iin arrears on Apriill 1st a dnd Oct bober 1st of eachh yyear, commencii gng on Oct bober 1, 2022. Thhe 2030 Se inior
NNotes wiillll vote as one cllass

dunder thhe ii dndenturt e ggover ini gng thhe 2030 Se inior Notes.

Thhe Issuer mayy reddeem some of or allll thhe 2030 Se inior Notes at a yny tiime priior to Apriill 1, 2025, at reddemptiion priices set forff
thhe 2030 Offff eff rii gng Memora dndum.

thh iin

ConCC trtt actual Oblill gat

itt ons

Our commitments to make futff urtt e payments as of December 31, 2022, are estimated as folff

lows:

(i(( n millions)s

Dividends

Term Loan B
Interest on Term Loan B (1)
Revolver
Interest on Revolver (1)
Term Loan B-1
Interest on Term Loan B-1 (1)
Term Loan A
Interest on Term Loan A(1)
2027 Senior Notes
2028 Senior Notes
2030 Senior Notes
Interest on 2027 Senior Notes

Interest on 2028 Senior Notes
Interest on 2030 Senior Notes

Operating and Finance Leases

All other
Total

2023

2024-2025

2026-2027

Thereaftff er

Total

27.0

4.0
22.1
—
38.3
3.0
17.2
40.0
45.9
—
—
—
33.0

33.3

69.0

8.9

2.5

— $

376.0
21.7
—
76.6
6.0
33.9
80.0
84.9
—
—
—
66.0

66.5

138.0

16.5

5.2

—
—
664.1
49.2
6.0
33.1
680.0
49.4
600.0
—
—
49.5

66.5

138.0

12.0

5.0

—
—
—
—
279.8
3.5
—
—
—
700.0
1,200.0
—

16.6

175.0

22.0

11.6

27.0

380.0
43.8
664.1
164.1
294.8
87.7
800.0
180.2
600.0
700.0
1,200.0
148.5

182.9

520.0

59.4

24.3

344.2

971.3

2,352.8

2,408.5

6,076.8

(1) Interest includes the estimated contractuat

l payments under our Credit Facility assuming no change in the weighted

average borrowing rate of 5.77%, which was the rate in place as of December 31, 2022.

As of December 31, 2022, we had appr
Critical Accounting Policies and Estimates

oximately $6.4 million of unrecognized tax benefiff ts.

Our signififf cant accounting policies and recently adopted accounting policies are more fulff
ly described in Note 2, Signififf cant
Accounting Policies of the notes to consolidated fiff nancial statements included in Item 8. Financial Statements and
Supplementaryrr Data of this Annual Report on Form 10-K.

Our consolidated fiff nancial statements have been prepared in conforff mity with GAAP, which requires management to make
estimates, judgments and assumptions that we believe are reasonabla e based on our historical experience, contract terms,
observance of known trends in our Company and the industryrr as a whole and inforff mation availabla e frff om other outside sources.
Our estimates affff eff ct the reported amounts of assets and liabia lities and related disclosures of contingent assets and liabia lities at
l results
the date of the fiff nancial statements and the reported amounts of revenue and expense during the reporting period. Actuat
may diffff eff r frff om those initial estimates.

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

Our critical accounting estimates relate to goodwill and certain indefiff nite-lived intangible assets.

G
Goodw

ilii lll and certaitt nii

inii defe iff nii itii ett -lill ved inii tantt

gibli ell assetstt

Acquisii ition of certain identifi iff able indefe iff nite-lived intangible assetstt

In conjunction with the acquisition of a business, the Company records identififf abla e indefiff nite-lived intangible assets acquired at
their respective faff ir values as of the date of acquisition. Our indefiff nite-lived intangible assets primarily consist of gaming rights
and trademarks. Gaming rights and trademarks are considered indefiff nite-lived intangible assets that do not require amortization
based on our futff urt e expectations to operate our gaming faff cilities and use the trademarks indefiff nitely, and our historical
experience in renewing these intangible assets at minimal cost with various state gaming commissions.

We use various valuation methods to determine initial faff ir value of our indefiff nite-lived intangible assets, including the
Greenfiff eld Method and relief-ff frff om-royalty method of the income appr
oach, all of which use signififf cant unobservabla e inputs, or
Level 3 inputs, as defiff ned by the faff ir value hierarchy. The use of these valuation methods requires us to make signififf cant
estimates and assumptions about
futff urt e revenue and operating expenses, expected start-up costs, capia tal expenditurtt es, royalty
rate, and the discount rate. The faff ir values of gaming rights are generally determined using the Greenfiff eld Method, which is an
oach methodology that calculates the present value based on a projected cash flff ow stream. This method assumes
income appr

that the gaming rights provides the opportuni
ty to develop a casino or historical racing faff cility in a specififf ed region, and that the
present value of the projected cash flff ows are a result of the realization of advantages contained in these rights. Under this
methodology, the acquirer is expected to absa orbr all start-up costs, as well as incur all expenses pertaining to the acquisition and/
or the creation of all tangible and intangible assets. The estimated futff urt e revenue and operating expenses, start-up costs of the
acquired business, and the discount rate are the primaryrr assumptions and estimates used in these valuations. The faff ir values of
trademarks are generally determined using the relief-ff frff om-royalty method of the income appr
oach, which estimates the faff ir
value of the intangible asset by discounting the faff ir value of the hypothetical royalty payments a market participant would be
willing to pay to enjoy the benefiff ts of the trademarks. The estimated futff urt e revenue, royalty rate, and the discount rate are the
primaryrr assumptions and estimates used in these valuations. The discount rates used to discount expected futff urt e cash flff ows to
present value are generally derived frff om the weighted average cost of capia tal analysis and adjusted forff
the size and/or risk of the
asset. Changes in estimates or the appl

ication of alternative assumptions could produce signififf cantly diffff eff rent results.

Assessmentstt of goodwill and indefe iff nite-lived intangible assetstt

We perforff m our annual review forff
impairment of goodwill and indefiff nite-lived intangible assets on April 1 of each fiff scal year,
or more frff equently if events or changes in circumstances indicate that it is more likely than not the asset is impaired. Adverse
industryrr or economic trends, lower projections of profiff tabia lity, or a sustained decline in our market capia talization, among other
items, may be indications of potential impairment issues which are triggering events requiring the testing of an asset’s carryirr ng
value forff

recoverabia lity.

gaming rights and relief-ff frff om-royalty method of the income appr

Goodwill and indefiff nite-lived intangible assets are required to be tested annually or more frff equently if events or changes in
circumstances indicate that it is more likely than not that an asset is impaired. An entity may fiff rst assess qualitative faff ctors to
determine whether it is necessaryrr
to complete the impairment test using a more likely than not criteria. If an entity believes it is
more likely than not that the faff ir value of a reporting unit is greater than the reporting unit's carryirr ng value, including goodwill,
the quantitative impairment test can be bypassed. Alternatively, an entity has an unconditional option to bypass the qualitative
assessment and proceed directly to perforff ming the quantitative impairment test. If a quantitative impairment test of goodwill is
oaches using inputs primarily
required, we generally determine the faff ir value under the market and income valuation appr
related to discounted projected cash flff ows and price multiples of publicly traded comparabla e companies.
If a quantitative
impairment test of our indefiff nite-lived intangible assets is required, we generally determine the faff ir value using the Greenfiff eld
trademarks. Qualitative faff ctors include
Method forff
oach forff
and market conditions, cost faff ctors and overall fiff nancial perforff mance, among others.
macroeconomic conditions, industryrr
These faff ctors require signififf cant judgments and estimates, and appl
ication of alternative assumptions could produce materially
a
diffff eff rent results. Evaluations of possible impairment require us to estimate, among other faff ctors, forff ecasts of futff urtt e operating
results, revenue growth, operating expense, tax rates, start-up costs, capia tal expenditurt es, depreciation, working capia tal,
discount rates, long-term growth rates, risk premiums, royalty rates, terminal values, and faff ir values of our reporting units and
assets. The impairment tests foff r goodwill and indefiff nite-lived intangible assets are subject to uncertainties arising frff om such
events as changes in competitive conditions, the current economic environment, material changes in growth rate assumptions
that could positively or negatively impact anticipated futff urt e operating conditions and cash flff ows, changes in the discount rate,
and the impact of strategic decisions. If any of these faff ctors were to materially change, such change may require a reevaluation
of our goodwill and indefiff nite-lived intangible assets. Changes in estimates or the appl
ication of alternative assumptions could
produce signififf cantly diffff eff rent results.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks arising frff om adverse changes in:

•

general economic trends; and

interest rate and credit risk.

GeG neral economic trtt ends

spending, which may result frff om
Our business is sensitive to consumer confiff dence and reductions in consumers' discretionaryrr
challenging economic conditions, unemployment levels and other changes in the economy. Demand forff
entertainment and
leisure activities is sensitive to consumers’ disposabla e incomes, which can be adversely affff eff cted by economic conditions and
unemployment levels. This could result in feff wer patrons visiting our racetracks, HRM entertainment venues, online wagering
sites, and gaming faff cilities, and/or may impact our customers’ abia lity to wager with the same frff equency and to maintain
wagering levels.

InII tett rest ratett and creditii risii k

exposure to market risk relates to changes in interest rates. On December 31, 2022, we had $2.1 billion
Our primaryrr
outstanding under our Credit Agreement, which bears interest at LIBOR and SOFR based variabla e rates. We are exposed to
market risk on variabla e rate debt due to potential adverse changes in these rates. Assuming the outstanding balance of the debt
faff cility remains constant, a one-percentage point increase in the LIBOR or SOFR rate would reduce net income and cash flff ows
June 30, 2023. The
existing debit agreements is set forff
frff om operating activities by $15.4 million. The phase-out of LIBOR forff
Credit Agreement includes a general process forff
establa ishing an alternative refeff rence rate to the extent LIBOR is phased out.
The Company is in the process of transitioning its fiff nancing frff om LIBOR to alternative refeff rence rates. These transition
activities are not expected to have a material impact on the Company’s fiff nancial statements.

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

2022

2021

2020

169.6
430.1
435.3
19.0
1,054.0

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARYR DATA
CHURCHILL DOWNS INCORPORARR TED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

forff

the years ended December 31,

(i(( n millions, exee cepte
Net revenue:

per common share data)

Live and Historical Racing
TwinSpires
Gaming
All Other

Total net revenue

Operating expense:

Live and Historical Racing
TwinSpires
Gaming
All Other
Selling, general and administrative expense
Asset impairments
Transaction expense

Total operating expense

Operating income
Other income (expense):
Interest expense, net
Equity in income of unconsolidated affff iff liates
Gain on Calder land sale
Miscellaneous, net

Total other income (expense)

Income frff om continuing operations beforff e provision forff
Income tax (provision) benefiff t

income taxes

Income frff om continued operations, net of tax

Loss frff om discontinued operations, net of tax

Net income (loss)

Net loss attributabla e to noncontrolling interest

Net income (loss) and comprehensive income (loss) attributable to
Churchill Downs Incorporated

Net income (loss) per common share data - basic:

Continuing operations
Discontinued operations
Net income (loss) per common share - basic

Net income (loss) per common share data - diluted:

Continuing operations
Discontinued operations
Net income (loss) per common share - diluted

Weighted average shares outstanding:

Basic
Diluted

$
$
$

614.6
436.4
755.9
2.9
1,809.8

400.9
293.6
537.9
11.0
164.2
38.3
42.1
1,488.0
321.8

(147.3)
152.7
274.6
7.0
287.0
608.8
(169.4)
439.4
—
439.4
—

409.1
451.4
695.4
41.3
1,597.2

288.9
345.8
476.3
40.1
138.5
15.3
7.9
1,312.8
284.4

(84.7)
143.2
—
0.7
59.2
343.6
(94.5)
249.1
—
249.1
—

439.4

249.1

11.58

$
— $
$

11.58

11.42

$
— $
$

11.42

6.45

$
— $
$

6.45

6.35

$
— $
$

6.35

37.9
38.5

38.6
39.2

The accompanying notes are an integral part of the consolidated fiff nancial statements.

179.0
293.1
357.9
30.5
114.8
17.5
1.0
993.8
60.2

(80.0)
27.7
—
0.1
(52.2)
8.0
5.3
13.3
(95.4)
(82.1)
(0.2)

(81.9)

0.34
(2.41)
)
(2.07)
(
)
(

0.33
(2.41)
)
(2.08)
(
)
(

39.6
40.1

CHURCHILL DOWNS INCORPORARR TED
CONSOLIDATED BALANCE SHEETS
December 31,

ASSETS

2022

2021

(i(( n millions)s

Current assets:

Cash and cash equivalents
Restricted cash
Accounts receivabla e, net
Income taxes receivabla e
Other current assets

Total current assets

Property and equipment, net
Investment in and advances to unconsolidated affff iff liates
Goodwill
Other intangible assets, net
Other assets
Long-term assets held forff

sale

Total assets

Current liabia lities:

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payabla e
Accruerr d expenses and other current liabia lities
Income taxes payabla e
Current defeff rred revenue
Current maturt
Dividends payabla e

ities of long-term debt

ities and loan origination feff es of $10.2 in 2022 and $6.2

Total current liabia lities
Long-term debt (net of current maturtt
in 2021)
Notes payabla e (net of debt issuance costs of $22.9 in 2022 and $7.6 in 2021)
Non-current defeff rred revenue
Defeff rred income taxes
Other liabia lities

Total liabia lities

Commitments and contingencies
Shareholders' equity:

Prefeff rred stock, no par value; 0.3 shares authorized; no shares issued or outstanding
Common stock, no par value; 150.0 shares authorized; 37.4 shares issued and outstanding
December 31, 2022 and 38.1 shares at December 31, 2021
Retained earnings
Accumulated other comprehensive loss

Total shareholders' equity

Total liabia lities and shareholders' equity

129.8
74.9
81.5
14.0
44.3
344.5
1,978.3
659.4
723.8
2,391.8
27.0
82.0
6,206.8

145.5
361.0
2.1
39.0
47.0
27.0
621.6

2,081.6

2,477.1
11.8
340.8
122.4
5,655.3

—

552.4
(0.9)
551.5
6,206.8

291.3
64.3
42.3
66.0
37.6
501.5
994.9
663.6
366.8
348.1
18.9
87.8
2,981.6

81.6
231.7
0.9
47.7
7.0
26.1
395.0

668.6

1,292.4
13.3
252.9
52.6
2,674.8

—

307.7
(0.9)
306.8
2,981.6

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

The accompanying notes are an integral part of the consolidated fiff nancial statements.

CHURCHILL DOWNS INCORPORARR TED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

forff

the years ended December 31, 2022, 2021 and 2020

Common Stock

(i(( n millions, exee cepte

per common share data)

Amount

Balance, December 31, 2019

39.7 $

— $

Accumulated
Other
Comprehensive
Loss

Retained
Earnings

Noncontrolling
Interest

Total
Shareholders'
Equity

509.2 $
(81.9)
(0.5)

(0.9) $

2.7 $
(0.2)
(2.5)

Net loss

Purchase of noncontrolling interest
Issuance of common stock
Repurchase of common stock

Cash settlement of stock awards
Taxes paid related to net share
settlement of stock awards
Stock-based compensation
Adoption of ASC 842

Cash dividends ($0.622 per share)
Balance, December 31, 2020

Net income

Issuance of common stock
Repurchase of common stock

Taxes paid related to net share
settlement of stock awards
Stock-based compensation

Cash dividends ($0.667 per share)
Balance, December 31, 2021

Net income

Issuance of common stock

Repurchase of common stock
Taxes paid related to net share
settlement of stock awards
Stock-based compensation

Cash dividends ($0.714 per share)

0.1

(0.2)

(0.1)

2.4

(4.3)

(3.6)

23.7

39.5

18.2

0.2

(1.5)

(0.1)

2.5

(48.5)

27.8

38.1

—

0.3

(0.9)

(0.1)

2.7

(34.5)

31.8

(23.6)
(12.7)

(15.1)

(0.5)

(25.1)

349.8

249.1

(249.0)

(16.1)

(26.1)

307.7

439.4

(141.0)

(26.9)

(26.8)

(0.9)

—

(0.9)

—

Balance, December 31, 2022

37.4 $

— $

552.4 $

(0.9) $

— $

The accompanying notes are an integral part of the consolidated fiff nancial statements.

511.0
(82.1)
(3.0)
2.4

(27.9)
(12.7)

(18.7)

23.7
(0.5)

(25.1)

367.1

249.1

2.5

(297.5)

(16.1)

27.8

(26.1)

306.8

439.4

2.7

(175.5)

(26.9)

31.8

(26.8)

551.5

CHURCHILL DOWNS INCORPORARR TED
CONSOLIDATED STATEMENTS OF CASH FLOWS

forff

the years ended December 31,

2022

2021

2020

439.4
—
439.4

249.1
—
249.1

(i(( n millions)s
Cash flff ows frff om operating activities:

Net income (loss)
Loss frff om discontinued operations, net of tax
Income frff om continuing operations, net of tax

Adjustments to reconcile net income (loss) to net cash provided by operating
activities:

Depreciation and amortization
Equity in income of unconsolidated affff iff liates
Distributions frff om unconsolidated affff iff liates
Stock-based compensation
Defeff rred income taxes
Asset impairments
Amortization of operating lease assets
Gain on Calder land sale
Other
Changes in operating assets and liabia lities, net of businesses acquired and
dispositions:

Income taxes
Defeff rred revenue
Other assets and liabia lities

Net cash provided by operating activities

Cash flff ows frff om investing activities:
Capia tal maintenance expenditurt es
Capia tal project expenditurt es
Acquisition of businesses, net of cash acquired
Acquisition of gaming rights, net of cash acquired
Proceeds frff om the Calder land sale
Other

Net cash used in investing activities

Cash flff ows frff om fiff nancing activities:

Proceeds frff om borrowings under long-term debt obligations
Repayments of borrowings under long-term debt obligations
Payment of dividends
Repurchase of common stock
Cash settlement of stock awards
Taxes paid related to net share settlement of stock awards
Debt issuance costs
Change in bank overdraftff
Other

Net cash provided by (used in) fiff nancing activities

113.7
(152.7)
156.9
31.8
108.7
38.3
5.3
(274.6)
7.4

28.2
(12.7)
21.1
510.8

(50.2)
(373.3)
(2,918.5)
(33.3)
279.0
(7.4)
(3,103.7)

2,862.4
(205.4)
(26.0)
(174.9)
—
(28.4)
(27.3)
13.3
2.3
2,416.0

(82.1)
(95.4)
13.3

92.9
(27.7)
30.7
23.7
30.1
17.5
5.0
—
4.5

(34.6)
(8.3)
(3.9)
143.2

(23.0)
(211.2)
—
—
—
(5.2)
(239.4)

726.1
(580.4)
(23.4)
(28.4)
(12.7)
(18.7)
(2.0)
13.4
2.1
76.0

(1.3)
(21.5)
142.5
121.0

F
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o
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0
0
-
-
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K

103.2
(143.2)
109.4
27.8
9.8
15.3
5.3
—
5.3

12.9
10.7
53.9
459.5

(39.5)
(52.3)
—
—
—
(8.6)
(100.4)

780.8
(430.9)
(24.8)
(297.5)
—
(12.9)
(6.9)
(10.5)
2.2
(0.5)

(124.0)
234.6
121.0
355.6

Cash flff ows frff om discontinued operations:
Operating cash flff ows of discontinued operations
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of year
Cash, cash equivalents and restricted cash, end of year

26.0
(150.9)
355.6
204.7

The accompanying notes are an integral part of the consolidated fiff nancial statements.

CHURCHILL DOWNS INCORPORARR TED
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

forff

the years ended December 31,

(i(( n millions)s
Supplemental disclosures of cash flff ow inforff mation:
Cash paid during the period forff

Interest
Cash paid forff
income taxes
Cash received frff om income tax refunds

Schedule of non-cash investing and fiff nancing activities:

Dividends payabla e
Defeff rred payment on gaming rights included in accounts payabla e and
accruerr d expenses
Property and equipment additions included in accounts payabla e and accruerr d
expense and other current liabia lities
Repurchase of common stock in payment of income taxes on stock-based
compensation included in accruerr d expense and other current liaba ilities

2022

2021

2020

133.6
68.6
61.6

77.5
72.4
—

27.0

50.6

51.3

1.7

—

18.7

3.2

79.6
1.6
—

25.8

—

12.9

—

The accompanying notes are an integral part of the consolidated fiff nancial statements.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

1. DESCRIPTION OF BUSINESS

ated ("CDI" or the "Company") has been creating extraordinaryrr entertainment experiences forff

We own and operate 13 live and historical racing entertainment venues in three states, one of the largest online horse racing
wagering platforff ms in the U.S., twelve casino gaming properties in ten states and ten retail sportsbooks. We were organized as
a Kentuct ky corpor

ation in 1928, and our principal executive offff iff ces are located in Louisville, Kentuct ky.

In the fiff rst quarter of 2022, we updated our operating segments to reflff ect the internal management reporting used by our chief
operating decision maker to evaluate results of operations and to assess perforff mance and allocate resources. During the fiff rst
quarter of 2022, our chief operating decision maker decided to include the results of our United Tote business in the TwinSpires
segment as we evolve our strategy to integrate the United Tote offff eff ring with TwinSpires Horse Racing, which we believe will
ties. For additional inforff mation, refeff r to Note 21, Segment Inforff mation.
create additional business-to-business revenue opportuni

Acquisii itii itt on of PePP ninii sulall PacPP ifi iff c EnEE tett rtaitt nii ment

On November 1, 2022, the Company completed the acquisition of substantially allll of thhe assets of Peninsula Pacififf c
Entertainment LLC ("P2E") with a base purchase price of $2.75 billion ("P2E Transaction") subject to working capia tal and
other purchase price adjustments. The P2E assets acquired included Colonial Downs Racetrack ("Colonial Downs") and six
Historical Racing Machine ("HRM") entertainment venues in Virginia, del Lago Resort & Casino in New York ("del Lago"),
and Hard Rock Hotel & Casino in Iowa ("Hard Rock Sioux City"), as well as the development rights forff Dumfrff ies and Emporia
HRM faff cilities in Virginia, up to fiff ve additional HRM entertainment venues in Virginia, and the potential forff ONE Casino and
Resort in Virginia in collabor

ation with Urbar n One.

Refeff r to Note 3, Acquisitions, forff

furff

ther inforff mation on the transaction.

Acquisii itii itt on of Ellll ill sii ParPP krr and ChCC asersrr PokePP

r Room

ChasCC

ersrr Pokekk r Room Acquisii ition

On September 2, 2022, the Company completed the acquisition of Chasers Poker Room ("Chasers") in Salem, New Hampshire
rights to operate the poker
(the "Chasers Transaction"). As part of the transaction, we made an initial payment to the sellers forff
room and to build an HRM venue. Additional payments will be made once all necessaryrr permits are obtained, and the planned
historical racing entertainment venue is opened. The Company plans to develop an expanded charitabla e gaming faff cility in
Salem to accommodate HRMs and tabla e games.

Ellisii Parkrr Acquisii ition

On September 26, 2022, the Company completed the acquisition of Ellis Park Racing & Gaming ("Ellis Park") in Henderson,
Kentuctt ky, frff om Enchantment Holdings, LLC, an affff iff liate of Laguna Development Corpor
total consideration of
$79.0 million in cash, subject to certain working capia tal and other purchase price adjustments (the "Ellis Park Transaction").

ation, forff

Refeff r to Note 3, Acquisitions, forff

furff

ther inforff mation on the transactions.

ImII pacm t of thtt e COCC VIVV DII -19 GlGG obal

PanPP demic

ted with the changing environment. All of our gaming properties have remained open since Januaryrr 2021.

The 146th Kentuctt ky Oaks and Derbyr were held in the third quarter of 2020 without spectators. During the second quarter of
city restrictions in compliance with Kentuct ky venue limitations at
2021, we held the 147th Kentuct ky Oaks and Derbyr with capaa
in each year were signififf cantly less than
that time. Due to such restrictions, our revenues frff om the Kentuctt ky Oaks and Derbyr
we would otherwise expect. The 148th Kentuct ky Oaks and Derbyr were held in the second quarter of 2022 without capaa
city
restrictions.

The extent to which the COVID-19 pandemic, including the emergence of variant strains, will continue to impact the Company
remains uncertain and will depend on many faff ctors that are not within our control. We will continue to monitor forff
new
developments related to the pandemic and assess these developments to maintain continuity in our operations.

F
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Churchill Downs Incorpor

ated

ExiEE tii of thtt e Dirii ect Onlill nii e SporSS

tstt and CasCC inii o Businii ess

Notes to Consolidated Financial Statements

In 2022, the Company exited the direct online Sports and Casino business in everyrr
The Company will maintain its retail Sports operations and has monetized two of its online market access licenses.
2. SIGNIFICANT ACCOUNTING POLICIES

state except forff

Pennsylvania and Arizona.

PrPP inii ciplii ell s of ConCC solill datitt on

The accompanying consolidated fiff nancial statements include the accounts of the Company and subsidiaries. All intercompany
balances and transactions have been eliminated in consolidation.

We consolidate all subsidiaries in which we have a controlling fiff nancial interest and variabla e interest entities ("VIEs") forff
which we or one of our consolidated subsidiaries is the primaryrr benefiff ciary.rr We consolidate a VIE when we have both the
power to direct the activities that most signififf cantly impact the results of the VIE and the right to receive benefiff ts or the
obligation to absa orbr

losses of the entity that could be potentially signififf cant to the VIE.

UsUU e of EsEE titt mii atett s

Our fiff nancial statements have been prepared in conforff mity with U.S. generally accepted accounting principles ("GAAP"),
which requires management to make estimates, judgments and assumptions that we believe are reasonabla e based on our
historical experience, contract terms, observance of known trends in our Company and the industryrr as a whole and inforff mation
availabla e frff om other outside sources. Our estimates affff eff ct the reported amounts of assets and liabia lities and related disclosures
of contingent assets and liabia lities at the date of the fiff nancial statements and the reported amounts of revenue and expense
during the reporting period. Actuat

l results may diffff eff r frff om those initial estimates.

G
Goodw

ilii lll and InII defe iff nii itii ett -L- ived InII tantt

gibli ell Assetstt

Goodwill and indefiff nite-lived intangible assets are required to be tested annually or more frff equently if events or changes in
circumstances indicate that it is more likely than not that an asset is impaired. An entity may fiff rst assess qualitative faff ctors to
determine whether it is necessaryrr
to complete the impairment test using a more likely than not criteria. If an entity believes it is
more likely than not that the faff ir value of a reporting unit is greater than the reporting unit's carryirr ng value, including goodwill,
the quantitative impairment test can be bypassed. Alternatively, an entity has an unconditional option to bypass the qualitative
assessment and proceed directly to perforff ming the quantitative impairment test. If a quantitative impairment test of goodwill is
oaches using inputs primarily
required, we generally determine the faff ir value under the market and income valuation appr
If a quantitative
related to discounted projected cash flff ows and price multiples of publicly traded comparabla e companies.
impairment test of our indefiff nite-lived intangible assets is required, we generally determine the faff ir value using the Greenfiff eld
gaming rights and relief-ff frff om-royalty method of the income appr
Method forff
trademarks. The Greenfiff eld Method is an
oach methodology that calculates the present value based on a projected cash flff ow stream. Qualitative faff ctors
income appr
and market conditions, cost faff ctors and overall fiff nancial perforff mance, among
include macroeconomic conditions, industryrr
others. These faff ctors require judgments and estimates, and appl
ication of alternative assumptions could produce signififf cantly
diffff eff rent results. Evaluations of possible impairment require us to estimate, among other faff ctors, forff ecasts of futff urtt e operating
results, revenue growth, operating expense, tax rates, start-up costs, capia tal expenditurt es, depreciation, working capia tal,
discount rates, long-term growth rates, risk premiums, royalty rates, terminal values and faff ir market values of our reporting
inputs to the
units and assets. The estimated futff urtt e revenue, operating expenses, start-up costs and discount rate are the primaryrr
Greenfiff eld Method. Changes in estimates or the appl
ication of alternative assumptions could produce signififf cantly diffff eff rent
results.

oach forff

impairment of goodwill and indefiff nite-lived intangible assets on April 1 of each fiff scal year,
We perforff m our annual review forff
or more frff equently if events or changes in circumstances indicate that it is more likely than not the relevant asset is impaired.
Adverse industryrr or economic trends, lower projections of profiff tabia lity, or a sustained decline in our market capia talization,
among other items, may be indications of potential impairment issues, which are triggering events requiring the testing of an
asset’s carryirr ng value forff
impairment at the reporting unit level, which
is defiff ned as an operating segment or one level below an operating segment, refeff rred to as a component. We are required to
aggregate the components of an operating segment into one reporting unit if they have similar economic characteristics.

recoverabia lity. Goodwill is allocated and evaluated forff

Our gaming rights and trademarks are considered indefiff nite-lived intangible assets that do not require amortization based on our
futff urt e expectations to operate our gaming faff cilities and use the trademarks indefiff nitely and our historical experience in
renewing these intangible assets at minimal cost with various state gaming commissions. The indefiff nite lived-intangible assets
carryirr ng value are tested annually, or more frff equently, if indicators of impairment exist, by comparing the faff ir value of the
recorded assets to the associated carryirr ng amount. If the carryirr ng amount of the gaming rights and trademark intangible assets
exceed faff ir value, an impairment loss is recognized.

Churchill Downs Incorpor

ated

PrPP opertytt and Equipmii

ent

Notes to Consolidated Financial Statements

We review the carryirr ng value of our property and equipment to be held and used in our operations whenever events or changes
in circumstances indicate that the carryirr ng value of an asset may not be recoverabla e frff om estimated futff urt e undiscounted cash
flff ows expected to result frff om the asset's use and eventuat
l disposition. Adverse industryrr or economic trends, lower projections
of profiff tabia lity, or a signififf cant adverse change in legal faff ctors or in the business climate, among other items, may be indications
If the
If the undiscounted cash flff ows exceed the carryirr ng value, no impairment is indicated.
of potential impairment issues.
undiscounted cash flff ows do not exceed the carryirr ng value, an impairment is recorded based on the faff ir value of the asset.

Depreciation is calculated using the straight-line method over the estimated usefulff
years forff
equipment, 2 to 10 years forff
tracks and other improvements.

grandstands and buildings, 2 to 10 years forff

lives of the related assets as folff
lows: 10 to 40
furff niturt e and fiff xturt es and 10 to 20 years forff

Revenue Recognitii itt on

We generate revenue frff om pari-mutuet
l wagering transactions with customers related to live races, simulcast races, and
historical races as well as simulcast host feff es earned frff om other wagering sites. Our racetracks that host live races also generate
revenue through sponsorships, admissions (including luxuryrr
television rights,
concessions, programs and parking. Concessions, programs, and parking revenue is recognized once the good or service is
delivered.

suites), personal seat

licenses ("PSLs"),

Our live racetracks' revenue and income are inflff uenced by our racing calendar. Similarly, TwinSpires Horse Racing revenue
any interim quarter are not generally
and income is inflff uenced by racing calendars. Thereforff e, revenue and operating results forff
indicative of the revenue and operating results forff
the corresponding period
of the previous year. We historically have had feff wer live racing days during the fiff rst quarter of each year, and the maja ority of
our live racing revenue occurs during the second quarter with the runni

the year and may not be comparabla e with results forff

ng of the Kentuct ky Oaks and Kentuctt ky Derby.

For live races we present at our racetracks, we recognize revenue on wagers we accept frff om customers at our racetrack ("on-
track revenue") and revenue we earn frff om exporting our live racing signals to other racetracks, offff -ff track betting faff cilities
("OTBs"), and advance deposit wagering providers ("export revenue"). For simulcast races we display at our racetracks, OTBs,
and TwinSpires' platforff ms, we recognize revenue we earn frff om providing a wagering service to our customers on these
imported live races ("import revenue"). TwinSpires import revenue is generated through advance deposit wagering which
consists of patrons wagering through an advance deposit account. Each wagering contract forff
on-track revenue, and import
revenue contains a single perforff mance obligation and our export revenue contracts contain a series of distinct services that forff m
on-track revenue and import revenue is fiff xed based on the
a single perforff mance obligation. The transaction price forff
establa ished commission rate we are entitled to retain. The transaction price forff
export revenue is variabla e based on the
simulcast host feff e we charge our customers forff
exporting our signal. We may provide cash incentives in conjunction with
wagering transactions we accept frff om TwinSpires' customers. These cash incentives represent consideration payabla e to a
the wagering transaction. Our export revenue
customer and thereforff e are treated as a reduction of the transaction price forff
contracts generally have a duration of one year or less. These arrangements are licenses of intellectuat
l property containing a
usage-based royalty. As a result, we have elected to use the practical expedient to omit disclosure related to remaining
perforff mance obligations forff
our export revenue contracts. We recognize on-track revenue, export revenue, and import revenue
once the live race event is made offff iff cial by the relevant racing regulatoryrr body.

We recognize revenue we earn frff om providing a wagering service to our customers on historical races at our HRM faff cilities.
The transaction price forff HRM revenue is based on the establa ished commission rate we are entitled to retain forff
each wager on
the HRM. We recognize HRM revenue once the historical race has been completed on the HRM, net of the liabia lity to the pool.

We evaluate our on-track revenue, export revenue, import revenue, and HRM revenue contracts in order to determine whether
we are acting as the principal or as the agent when providing services, which we consider in determining if revenue should be
reported gross or net. An entity is a principal if it controls the specififf ed service beforff e that service is transfeff rred to a customer.

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on-track revenue, import revenue, and HRM revenue is the commission we are entitled to retain
providing a wagering service to our customers. For these arrangements, we are the principal as we control the wagering
delivering the wagering service are

The revenue we recognize forff
forff
service; thereforff e, any charges, including any appl
presented as operating expenses.

icabla e simulcast feff es, we incur forff

For export revenue, our customer is the third-party wagering site such as a racetrack, OTB, or advance deposit wagering
provider. Thereforff e, the revenue we recognize forff
exporting our racing
signal to the third-party wagering site.

export revenue is the simulcast host feff e we earn forff

a single live racing event day or multiple days. Our PSLs, sponsorships, and television
Our admission contracts are either forff
rights contracts generally relate to multiple live racing event days. Multiple day admission, PSLs, sponsorships, and television

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

rights contracts contain a distinct series of services that forff m single perforff mance obligations. Sponsorship contracts generally
include perforff mance obligations related to admissions and advertising rights at our racetracks. Television rights contracts
contain a perforff mance obligation related to the rights to distribute certain live racing events on media platforff ms. The
transaction prices forff
our admissions, PSLs, sponsorships, and television rights contracts are fiff xed. We allocate the transaction
price to our sponsorship contract perforff mance obligations based on the estimated relative standalone selling price of each
distinct service.

The revenue we recognize forff
admissions to a live racing event day is recognized once the related event is complete. For
admissions, PSLs, sponsorships, and television rights contracts that relate to multiple live racing event days, we recognize
revenue over time using an output
tt method of each completed live racing event day as our measure of progress. Each completed
live racing event day corresponds with the transfeff r of the relevant service to a customer and thereforff e is considered a faff ithfulff
depiction of our effff orff
t method results in measuring the value transfeff rred
to date to the customer relative to the remaining services promised under the contracts. Certain premium live racing event days
such as the Kentuct ky Derbyr
and Oaks result in a higher value of revenue allocated relative to other live racing event days due
to, among other things, the quality of thoroughbreds racing, higher levels of on-track attendance, national broadcast audience,
local and national media coverage, and overall entertainment value of the event. While these perforff mance obligations are
satisfiff ed over time, the timing of when this revenue is recognized is directly associated with the occurrence of our live racing
events, which is when the maja ority of our revenues recognized at a point in time are also recognized.

the promises in these contracts. This output

ts to satisfyff

racing
Timing of revenue recognition may diffff eff r frff om the timing of invoicing to customers forff
event-related services. We generally invoice customers prior to deliveryrr of services forff
our admissions, PSLs, sponsorships,
and television rights contracts. We recognize a receivabla e and a contract liabia lity at the time we have an unconditional right to
receive payment. When cash is received in advance of delivering services under our contracts, we defeff r revenue and recognize
tions where the timing of revenue recognition diffff eff rs frff om
it in accordance with our policies forff
the timing of invoicing, we have determined our contracts do not include a signififf cant fiff nancing component. The primaryrr
purpos
e of our invoicing terms is to allow our customers to secure the right to the specififf c services provided under our
rr
contracts, not to receive fiff nancing frff om our customers.

that type of contract. In situatt

our long-term contracts forff

Gaming revenue primarily consists of gaming transactions. Other operating revenue, such as foodff
revenue, is recognized once deliveryrr of the product or service has occurred.

and beverage or hotel

The transaction price forff
recognized when the wager settles.

gaming transactions is the diffff eff rence between gaming wins and losses. Gaming wager revenue is

The maja ority of our HRM faff cilities and gaming properties offff eff r loyalty programs that enabla e customers to earn loyalty points
based on their play. HRM and gaming transactions involve two perforff mance obligations forff
those customers earning loyalty
customers who do not participate in the
points under the Company’s loyalty programs and a single perforff mance obligation forff
es of
and beverage. For purpos
ff
program. Loyalty points are primarily redeemabla e forff
allocating the transaction price in an HRM and gaming transaction between the wagering perforff mance obligation and the
obligation associated with the loyalty points earned, the Company allocates an amount to the loyalty point contract liabia lity
based on the stand-alone selling price of the points earned, which is determined by the value of a loyalty point that can be
and beverage. For gaming transactions, an amount of the transaction price allocated
redeemed forff wagering activities or food
to the gaming perforff mance obligation using the residual appr
oach as the stand-alone price forff wagers is highly variabla e and no
set establa ished price exists forff
such wagers. For HRM transactions, the amount of the transaction price allocated to the HRM
perforff mance obligation is the commission rate we are entitled to retain. The loyalty point contract liabia lity amount is defeff rred
and beverage, and such
and recognized as revenue when the customer redeems the points forff
goods or services are delivered to the customer.

frff ee wagering activities and food

a wagering transaction or food

s
InII come TaxeTT

We use estimates and judgments forff
with the liabia lity method of accounting forff
year and defeff rred tax assets and liabia lities forff
consolidated fiff nancial statements or tax returt ns.

fiff nancial reporting to determine our current tax liabia lity and defeff rred taxes. In accordance
the current
the futff urt e tax consequences of events that have been recognized in the

income taxes, we recognize the amount of taxes payabla e or refunda

bla e forff

Adjustments to defeff rred taxes are determined based upon the changes in diffff eff rences between the book basis and tax basis of our
assets and liabia lities and measured using enacted tax rates we estimate will be appl
icabla e when these diffff eff rences are expected to
reverse. Changes in current tax laws, enacted tax rates or the estimated level of taxabla e income or non-deductible expense
could change the valuation of defeff rred tax assets and liabia lities and affff eff ct the overall effff eff ctive tax rate and tax provision.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

When tax returt ns are fiff led, it is highly certain that some positions taken will be sustained upon examination by the taxing
the merits of the position taken or the amount of the position that will
authorities, while others are subject to uncertainty about
be ultimately sustained. The benefiff t of a tax position is recognized in the fiff nancial statements in the period during which, based
on all availabla e evidence, management believes it is more likely than not that the position will be sustained upon examination,
including the resolution of appe
als or litigation processes, if any. Tax positions taken are not offff sff et or aggregated with other
positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax
icabla e taxing authority. The portion of
benefiff t that is more than 50 percent likely of being realized upon settlement with the appl
the benefiff ts associated with the tax positions taken that exceeds the amount measured as described above
is reflff ected as a
liabia lity forff
unrecognized tax benefiff ts in the accompanying Consolidated Balance Sheets, along with any associated interest and
penalties that would be payabla e to the taxing authorities upon examination.

CasCC h and CasCC h Equivalell ntstt

We consider investments with original maturt
ities of three months or less that are readily convertible to cash to be cash
equivalents. We have, frff om time to time, cash in the bank in excess of feff derally insured limits. Under our cash management
system, checks issued but not yet presented to banks that would result in negative bank balances when presented are classififf ed
as a current liabia lity in the accompanying Consolidated Balance Sheets.

Restrtt ictett d CasCC h and Account WageWW rinii g Depos

i
itii Liabi

lii ill tii itt es

Restricted cash includes deposits collected frff om our TwinSpires' customers. Other amounts included in restricted cash
l
purses, stakes and awards that are paid in accordance with the terms of our contractuat
represent amounts due to horsemen forff
agreements or statutt oryrr

requirements.

Allll owll

ance forff Doubtftt uff l Accountstt Receivablell

ents - Credit Losses ("ASC 326") on Januaryrr 1, 2020, we maintain an allowance forff

Upon our adoption of Accounting Standards Update ("ASU") of the Accounting Standards Codififf cation ("ASC") No. 2016-13,
Financial Instrumrr
accounts forff
current expected credit losses on our fiff nancial assets measured at amortized cost which are primarily included in Accounts
receivabla e, net in the accompanying Consolidated Balance Sheets. The Company evaluates current expected credit losses on a
collective (pool) basis when similar risk characteristics exist. Write-offff sff are recognized when the Company concludes that all
or a portion of a fiff nancial asset is no longer collectible. Any subsequent recoveryrr

is recognized when it occurs.

doubtfulff

InII tett rnal UsUU e SofSS tff wtt are

Internal use softff ware costs forff
our TwinSpires' segment softff ware are capia talized in Property and equipment, net in the
accompanying Consolidated Balance Sheets, in accordance with accounting guidance governing computer softff ware developed
internal use. Once the softff ware is placed in operation, we amortize the capia talized softff ware over the softff ware's
or obtained forff
oximately
estimated economic usefulff
lifeff , which is generally three years. We capia talized internal use softff ware of appr
$11.2 million in 2022, $10.7 million in 2021, and $10.5 million in 2020. We incurred amortization expense of appr
oximately
projects which had been placed in service.
$10.7 million in 2022, $10.3 million in 2021, and $9.4 million in 2020, forff

a
a

FaiFF rii ValVV ue of Assetstt and Liabi

lii ill tii itt es

ranking the quality and reliabia lity of the inforff mation used to determine faff ir values. Assets and
We adhere to a hierarchy forff
lowing three categories: Level 1: Unadjusted
liabia lities that are carried at faff ir value are classififf ed and disclosed in one of the folff
identical assets or liabia lities; Level 2: Unadjusted quoted prices in active markets forff
quoted market prices in active markets forff
identical or similar assets or liabia lities in markets that are not active, or
similar assets or liabia lities, unadjusted quoted prices forff
inputs other than quoted prices that are observabla e forff
the asset or
the asset or liabia lity; and Level 3: Unobservabla e inputs forff
liabia lity. We endeavor to utilize the best availabla e inforff mation in measuring faff ir value. Financial assets and liabia lities are
classififf ed based on the lowest level of input that is signififf cant to the faff ir value measurement.

InII vestmtt entstt

inii and Advances tott UnUU consolill datett d AfA fff iff lii ill ati ett s

under the equity method. Under the equity method, carryirr ng
We have investments in unconsolidated affff iff liates accounted forff
our share of the investees' income and losses, amortization of certain basis diffff eff rences as well as capia tal
value is adjusted forff
contributions to and distributions frff om these companies. We use the cumulative earnings appr
oach to present distributions
received frff om equity method investees. Distributions in excess of equity method income are recognized as a returtt n of
investment and recorded as investing cash inflff ows in the accompanying Consolidated Statements of Cash Flows. We classifyff
income and losses as well as gains and impairments related to our investments in unconsolidated affff iff liates as a component of
Other income (expense) in the accompanying Consolidated Statements of Comprehensive Income (Loss).

impairment whenever events or changes in circumstances indicate
We evaluate our investments in unconsolidated affff iff liates forff
that the carryirr ng value of the investment may have experienced an "other-than-temporary"rr
decline in value. If such conditions
exist, we compare the estimated faff ir value of the investment to the investment's carryirr ng value to determine if an impairment is

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Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

indicated and determine whether the impairment is "other-than-temporary"rr
based on an assessment of all relevant faff ctors,
including consideration of our intent and abia lity to retain our investment until the recoveryrr of the unrealized loss. We estimate
faff ir value using a discounted cash flff ow analysis based on estimated futff urt e results of the investee.

Businii ess ComCC binii atitt ons

iquisiitiion to thhe assets ac

We account forff
ppurchhase priice of an ac
excess of consiidderatiion transfeff rredd recorddedd as goodw
cons loliiddatedd fiiff nanciiall statements frff om thheiir respectiive ddates of ac
combination are not consiidderedd part of consiidderatiion a dnd are expensedd as iincurredd. Refeff r to Note 3, Acquisitions, forff
ii fnforff matiion.

iquisiitiions of bbusiinesses iin accorddance wiithh ASC 805, Business Combinations. We ii initiiallllyy allllocate thhe
iquiredd a dnd lliiabibia lliitiies assumedd bbasedd on thheiir estiimatedd faff iir vallues, wiithh a yny
iquisiitiions are iincll dudedd iin thhe
iquisiitiion. Costs iincurredd to com lplete thhe busb iness
thher

goodwiillll. Thhe res lults of operatiions of ac

furff

Leases

We determine if an arrangement is a lease at inception and categorize as either operating or fiff nance based on the criteria of ASC
842. An arrangement contains a lease when the arrangement conveys the right to control the use of an identififf ed asset over the
lease term. Operating and fiff nance leases are included in Property and equipment, net; Accruerr d expense and Other current
liabia lities; and Other liabia lities in the accompanying Consolidated Balance Sheets. We generally do not separate lease and non-
lease components forff
y the right-of-ff use assets ("ROUA") and leases liabia lity recognition
requirements to short-term leases.

our lease contracts. We do not appl

Lease liabia lities are recognized based on the present value of the futff urtt e minimum lease payments over the lease term at the
commencement date. These leases do not provide an implicit rate, so thereforff e we use our incremental borrowing rate based on
the inforff mation availabla e at the commencement date in determining the present value of futff urt e lease payments. ROUAs are
any lease payments made prior to
recognized at the lease commencement date at the value of the lease liabia lity, adjusted forff
commencement and exclude lease incentives and initial direct costs incurred. The lease terms include all non-cancelabla e
periods and may include options to extend or terminate the lease when it is reasonabla y certain that we will exercise that option.
Lease expense forff minimum lease payments is recognized on a straight-line basis over the lease term forff
operating leases.
Interest expense on the fiff nance lease liabia lities is recorded separately using the interest method.

We do not have any material leases where we are the lessor.

Debt IsII suance CosCC tstt and Loan Origii nii atitt on FeFF es

Debt issuance costs and loan origination feff es associated with our term debt, revolver, and notes payabla e are amortized as
interest expense over the term of each respective fiff nancial instrumrr
ent. Debt issuance costs and loan origination feff es associated
with our term debt and notes payabla e are presented as a direct deduction frff om the carryirr ng amount of the related liabia lity. Debt
issuance costs and loan origination feff es associated with our revolver are presented as an asset.

s
CasCC inii o and ParPP i-ii mutuel TaxeTT

l tax expense based on the statuttt oryrr

requirements of the feff deral, state, and local
We recognize casino and pari-mutuett
jurisdictions in which we conduct business. All of our casino taxes and the maja ority of our pari-mutuet
l taxes are gross receipts
taxes levied on the gaming entity. We recognize these taxes as Live and Historical Racing, TwinSpires, Gaming, and All Other
In certain jurisdictions governing our
operating expenses in our Consolidated Statements of Comprehensive Income (Loss).
pari-mutuet
l taxes that are assessed on winning wagers frff om our
customers, which we collect and remit to the government. These taxes are presented on a net basis.

l contracts with customers, there are specififf c pari-mutuett

Pursrr e ExpeEE

nse

We recognize purse expense based on the statutt orily or contractuat
forff m of purses to the qualifyiff ng fiff nishers of horse races runrr
a liabia lity forff

all unpaid purses that will be paid out on a futff urt e live race event.

lly determined amount that is required to be paid out in the
at our racetracks in the period in which wagering occurs. We incur

SeSS lfll -ff inii surance Accrualsll

costs associated with general liabia lity, workers’ compensation and certain employee
We are self-ff insured up to certain limits forff
claims that exceed our self-ff insurance retention or deductible levels. We
health coverage costs, and we purchase insurance forff
known claims ("Case Reserves"), as well as
record self-ff insurance reserves that include accruarr
claims incurred but not yet reported ("IBNR"). Case Reserves represent estimated
accruarr
liabia lities forff
unpaid losses, based on a claims administrator's estimates of futff urt e payments on individual reported claims,
including allocated loss adjustment expense, which generally include claims settlement costs such as legal feff es. IBNR includes
the provision forff

unreported claims, changes in case reserves and futff urt e payments on reopened claims.

ls of estimated settlements forff

ls of third-party actuat

rial estimates forff

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Key variabla es and assumptions include, but are not limited to, loss development faff ctors and trend faff ctors such as changes in
workers' compensation laws, medical care costs and wages. These loss development faff ctors and trend faff ctors are developed
l historical losses. It is possible that reasonabla e alternative selections would produce diffff eff rent reserve estimates.
using our actuat

Advertitt sii inii g and MarMM kerr

titt nii g

We expense the costs of general advertising, marketing and associated promotional expenditurtt es at the time the costs are
oximately $52.9 million in 2022, $74.5 million in 2021, and
a
incurred. We incurred advertising and marketing expense of appr
$31.4 million in 2020 in our accompanying Consolidated Statements of Comprehensive Income (Loss).

StSS octt k-B- ased ComCC pem nsatitt on

All stock-based payments to employees and directors, including grants of perforff mance share units and restricted stock, are
recognized as compensation expense over the service period based on the faff ir value on the date of grant. For awards that have a
graded vesting schedule, we recognize expense on a straight-line basis forff
each separately vesting portion of the award. We
recognize forff

feff iturt es of awards as incurred.

ComCC pum tattt

itt on of NeNN t InII come per ComCC mon ShSS are

Net income per common share is presented forff
both basic earnings per common share ("Basic EPS") and diluted earnings per
common share ("Diluted EPS"). Basic EPS is based upon the weighted average number of common shares outstanding,
excluding unvested stock awards, during the period plus vested common stock equivalents that have not yet been converted to
common shares. Diluted EPS is based upon the weighted average number of shares used to calculate Basic EPS and potentially
dilutive common shares outstanding during the period. Potentially dilutive common shares result frff om appl
ying the treasuryrr
stock method to unvested stock awards.

ComCC mon StSS octt k ShSS are Repuee

rchases

From time-to-time, we repurchase shares of our common stock under share repurchase programs and privately negotiated
transactions authorized by our Board of Directors. Share repurchases constitutt e authorized but unissued shares under the
Kentuctt ky laws under which we are incorpor
l value of
share repurchases, upon the trade date, against common stock on our Consolidated Balance Sheets except when to do so would
result in a negative balance in such common stock account.
ther share
repurchases as a reduction to retained earnings. Due to the large number of shares of our common stock repurchased over the
past several years, our common stock balance will frff equently be zero at the end of any given reporting period. Refeff r to Note
10, Shareholders' Equity, forff

ated. Our common stock has no par or stated value. We record the fulff

In such instances, we record the cost of any furff

additional inforff mation on our share repurchases.

InII surance Recoveries

The Company maintains insurance policies that provide coverage forff
ion. Losses due
to physical damages are recognized during the accounting period in which the loss occurs, while the amount of monetaryrr assets
to be received frff om the insurance policy is recognized when receipt of insurance recoveries is probabla e. Losses, which are
reduced by the related probabla e insurance recoveries, are recorded as operating expenses on the accompanying Consolidated
Statements of Comprehensive Income (Loss). Anticipated proceeds in excess of recognized losses would be considered a gain
contingency and recognized when the contingency related to the insurance claim has been resolved.

property damages and business interrupt

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Recent Accountitt nii g PrPP onouncementstt - Adoptett d on Januaryr 1, 2021

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifyiff ng the Accounting forff
which simplififf es the accounting forff
Income Taxes. The amendments also clarifyff and amend existing guidance to improve consistent appl
GAAP forff
beginning aftff er December 15, 2020. The adoption of this ASU did not have a material impact on our business.

Income Taxes,
income taxes by removing certain exceptions to the general principles in ASC Topic 740,
ication of and simplifyff
fiff scal years and interim periods

other areas of Topic 740. This ASU was effff eff ctive forff

public business entities forff

Recent Accountitt nii g PrPP onouncementstt - efe fff eff ctitt ve inii 2023 or thtt ereaftff ett r

In March 2020, the FASB issued ASU 2020-04, Refeff rence Rate Reforff m (Topic 848): Facilitation of the Effff eff cts of Refeff rence
ying the guidance on contract
Rate Reforff m on Financial Reporting, which provides optional expedients and exceptions to appl
modififf cations, hedge accounting, and other transactions, and to simplifyff
transitioning frff om the London
Interbar nk Offff eff red Rate ("LIBOR") and other interbar nk offff eff red rates to alternative refeff rence rates. The guidance was effff eff ctive
upon issuance. In December 2022, the FASB defeff rred the date forff which this guidance can be appl
ied frff om December 31, 2022
to December 31, 2024. The use of LIBOR was phased out at the end of 2021, although the phase-out of U.S. dollar LIBOR forff
existing agreements has been delayed until June 2023. We continue to monitor developments related to the LIBOR transition
and identififf cation of an alternative, market-accepted rate.

a
the accounting forff

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

3. ACQUISITIONS

ChCC asersrr PokePP

r Room

On September 2, 2022, the Company completed the Chasers Transaction which was treated as an asset acquisition because
substantially all the value of the gross assets acquired was concentrated in the gaming rights. The Company made an initial
payment at closing and recorded a liabia lity forff
In conjunction with the
acquisition, the Company recorded an $82.2 million gaming rights intangible asset which represented its faff ir value at the date of
acquisition.

the remaining payments due on a futff urt e date.

The faff ir value of the gaming rights acquired in the Chasers Transaction was determined using the Greenfiff eld Method, which is
oach methodology that calculates the present value of the gaming rights intangible asset based on a projected
an income appr
cash flff ow stream. This method assumes that the gaming rights intangible asset provides the opportuni
ty to develop a gaming or
historical racing faff cility in a specififf ed region, and that the present value of the projected cash flff ows is a result of the realization
of advantages contained in these rights. Under this methodology, the acquirer is expected to absa orbr all start-up costs, as well as
incur all expenses pertaining to the acquisition and/or the creation of all tangible and intangible assets. The estimated futff urt e
revenue, futff urtt e operating expenses, start-up costs, and discount rate were the primaryrr
inputs in the valuation. The gaming
based on the Company's expected use of the asset and
rights intangible asset was assigned an indefiff nite usefulff
determination that no legal, regulatory,rr
lifeff of the gaming
rights.

l, competitive, economic, or other faff ctors limit the usefulff

contractuat

lifeff

Ellll ill sii ParPP krr

On September 26, 2022, the Company completed the Ellis Park Transaction forff
total consideration of $79.0 million in cash,
plus $3.5 million in working capia tal and other preliminaryrr purchase price adjustments. The faff ir values of the Ellis Park
Transaction were based upon preliminaryrr valuations. Estimates and assumptions used in such valuations are subject to change,
which could be signififf cant, within the measurement period up to one year frff om the acquisition date. The areas of the
preliminaryrr valuations that are not yet fiff nalized relate to the amounts forff
income taxes, working capia tal adjustments and the
fiff nal amount of residual goodwill. The Company expects to continue to obtain inforff mation to assist in determining faff ir values
faff ir values of the assets acquired
of net assets acquired at the acquisition date during the measurement period. The preliminaryrr
and liabia lities assumed, net of cash acquired of $1.4 million, at the date of acquisition were as folff
lows: property and equipment
of $19.3 million, indefiff nite-lived gaming rights of $47.4 million, indefiff nite-lived trademark of $3.6 million, goodwill of
$9.2 million, and net working capia tal of $1.6 million.

The Company has not included other disclosures regarding the Chasers or Ellis Park Transactions as they are immaterial to our
business.

P2EPP

TrTT ansactitt on

a preliminaryrr purchase
On November 1, 2022, the Company completed the acquisition of substantially allll thhe assets of P2E forff
consideration of $2,835.9 million, net of cash acquired. The P2E assets acquired included Colonial Downs and six HRM
entertainment venues in Virginia, del Lago in New York, and Hard Rock Sioux City in Iowa, as well as the development rights
forff Dumfrff ies and Emporia HRM faff cilities in Virginia, up to fiff ve additional HRM entertainment venues in Virginia, and ONE
Casino & Resort in Virginia in collabor

ation with Urbar n One.

lowing tabla e summarizes the preliminaryrr

The folff
$126.4 million, as of November 1, 2022:

faff ir value of the assets acquired and liabia lities assumed, net of cash acquired of

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

(i(( n millions)s

Accounts receivabla e, net
Other current assets
Property and equipment
Goodwill
Other intangible assets

Defeff rred taxes
Other assets

Total assets acquired

Accounts payabla e

Accruerr d expenses and other current liabia lities
Other liabia lities assumed

Total liabia lities assumed

Net assets acquired (net of cash)

The faff ir value of the intangible assets consists of the folff

lowing:

(i(( n millions)s

Gaming rights

Trademark

Total intangible assets

Total

9.8
7.2
611.2
347.8
1,941.5

20.8
16.0
2,954.3

4.0

96.9
17.5
118.4
2,835.9

Fair Value
Recognized

1,865.6

75.9

1,941.5

$
$

Current assets and current liabia lities were valued at the existing carryirr ng values, as these items are short term in naturt e and
represent management's estimated faff ir value of the respective items at November 1, 2022.

The property and equipment acquired primarily relates to land, buildings, equipment, and furff niturt e and fiff xturt es. The faff ir value
of the land was determined using the market appr
oach and the faff ir values of the remaining property and equipment were
primarily determined using the cost replacement method which is based on replacement or reproduction costs of the assets.

oach methodology
The faff ir value of the gaming rights was determined using the Greenfiff eld Method, which is an income appr
ise based on a projected cash flff ow stream. This method assumes
that calculates the present value of the overall business enterprrr
that the gaming rights intangible assets provide the opportuni
ty to develop a casino or historical racing faff cility in a specififf ed
region, and that the present value of the projected cash flff ows are a result of the realization of advantages contained in these
rights. Under this methodology, the acquirer is expected to absa orbr all start-up costs, as well as incur all expenses pertaining to
the acquisition and/or the creation of all tangible and intangible assets. The estimated futff urtt e revenue and operating expenses,
start-up costs, and discount rates were the primaryrr assumptions and estimates in the valuation of the gaming rights. The gaming
lifeff based on the Company's expected use of the assets and
rights intangible assets were assigned an indefiff nite usefulff
determination that no legal, regulatory,rr
lifeff of the gaming
rights.

l, competitive, economic, or other faff ctors limit the usefulff

contractuat

The trademark intangible assets were valued using the relief-ff frff om-royalty method of the income appr
oach, which estimates the
faff ir value of the intangible assets by discounting the faff ir value of the hypothetical royalty payments a market participant would
be willing to pay to enjoy the benefiff ts of the assets. The estimated futff urt e revenue, royalty rates, and discount rates were the
lifeff
primaryrr assumptions and estimates in the valuation of the trademarks. The trademarks were assigned an indefiff nite usefulff
based on the Company’s intention to keep the trademarks forff

an indefiff nite period of time.

Goodwill of $347.8 million was recognized due to the expected contribution of P2E to the Company's overall business strategy.
The goodwill was assigned to the Gaming segment in the amount of $129.1 million and to the Live and Historical Racing
segment in the amount of $218.7 million and is mostly deductible forff

tax purpos

es.

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Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Estimates and assumptions used in such valuations are subject to change, which could be signififf cant, within the measurement
period up to one year frff om the acquisition date. The preliminaryrr purchase consideration is subject to adjustment upon
fiff nalization of customaryrr post-closing adjustments related to working capia tal. The primaryrr areas of the preliminaryrr valuation
that are not yet fiff nalized relate to the faff ir values of amounts forff
income taxes, property and equipment, and intangible assets,
adjustments to working capia tal, and the fiff nal amount of residual goodwill. The Company expects to continue to obtain
inforff mation to assist in determining faff ir values of net assets acquired at the acquisition date during the measurement period.

For the period November 1, 2022 through December 31, 2022, the operations of the properties acquired as part of the P2E
Transaction,
income of
including the associated retail sportsbooks, generated net revenue of $109.7 million and net
$42.9 million.

lowing unaudited pro forff ma consolidated fiff nancial inforff mation forff

the Company has been prepared assuming the P2E
The folff
Transaction had occurred as of Januaryrr 1, 2021. The unaudited pro forff ma fiff nancial inforff mation is not necessarily indicative of
either futff urt e results of operations or results of operations that might have been achieved had the acquisition been consummated
as of Januaryrr 1, 2021.

(i(( n millions)s
Net revenue
Net income

Year Ended
December 31, 2022
$
$

2,348.7 $
535.4 $

Year Ended
December 31, 2021
2,153.6
205.1

4. DISPOSITIONS, ASSETS HELD FOR SALE & DISCONTINUED OPERARR TIONS

CalCC dell

r Land SalSS ell

oximately $2.5 million per acre to Link Logistics Real Estate, a Blackstone portfolff

$291.0 million or
On June 17, 2022, the Company closed on the sale of 115.7 acres of land near Calder Casino ("Calder") forff
appr
io company. The Company received
a
cash proceeds of $279.0 million which was net of $12.0 million of transaction costs. We recognized a gain of $274.6 million
on the sale of the land, which is included in Other income in the accompanying Condensed Consolidated Statements of
Comprehensive Income (Loss). The gain consisted of cash proceeds of $279.0 million offff sff et by the carryirr ng value of the assets
sold of $4.4 million. The proceeds were held by a qualifyiff ng intermediaryrr
in an interest-bearing account until they could be
utilized in a like-kind exchange.

The Company utilized proceeds and interest earned frff om the sale to purchase property as part of the P2E Transaction and to
invest in other replacement properties that qualifyff as Internal Revenue Code §1031 transactions to defeff r the feff deral income tax
on the gain on the Calder land sale. The Company completed one reverse like-kind exchange in June 2022 involving our
the Derbyr City Gaming Downtown faff cility in Louisville, Kentuctt ky, and one reverse
$9.9 million investment in real property forff
the Terre Haute Casino
like-kind exchange in December 2022 involving our $24.9 million investment in real property forff
Resort in Vigo County, Indiana ("Terre Haute"). The remaining proceeds were used to execute a forff ward like-kind exchange
with the P2E Transaction to purchase real property associated with del Lago in November 2022.

As of December 31, 2022, the Company recorded a $76.0 million defeff rred tax liabia lity on the Condensed Consolidated Balance
Sheets.

As of December 31, 2021, the assets sold as part of the Calder land sale were classififf ed as held forff
Condensed Consolidated Balance Sheets. Calder's operations and assets are included in the Gaming segment
consolidated results.

sale on the accompanying
in our

Assetstt HeHH ldll

forff

SalSS ell

On September 29, 2021, the Company announced an agreement to sell the 326-acre property in Arlington Heights, Illinois (the
"Arlington Property"), to the Chicago Bears forff

$197.2 million.

The Company has classififf ed certain assets of Arlington International Racecourse ("Arlington") totaling $82.0 million and
$81.5 million as held forff
sale as of December 31, 2022 and December 31, 2021, respectively, on the accompanying
Consolidated Balance Sheets. Arlington’s operations and assets are included in All Other in our consolidated results.

The Company executed a forff ward like-kind exchange transaction by purchasing certain property as part of the P2E Transaction
forff
$197.2 million. An exchange accommodation titleholder ("EAT"), a type of variabla e interest entity, was used to faff cilitate
this reverse like-kind exchange. The Company determined that it is the primaryrr benefiff ciaryrr of the EAT, thus the property held
by the EAT has been consolidated and recorded in Property and equipment, net on the Condensed Consolidated Balance Sheets.
On Februarr

ryrr 15, 2023, the Company closed on the sale and fulff

ly realized all the planned tax savings.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Disii contitt nii ued OpeOO ratitt ons

On Januaryrr 9, 2018, the Company completed the sale of its mobile gaming subsidiary,rr Big Fish Games, Inc. ("Big Fish
Games"). The Big Fish Games business met the criteria forff
discontinued operation presentation. The Consolidated Statements
of Comprehensive Income (Loss), Consolidated Statements of Cash Flows, and the Notes to Consolidated Financial Statements
all periods presented.
reflff ect Big Fish Games as discontinued operations forff

On May 22, 2020, we entered into an agreement in principle to settle Cherylrr Kater v. Churchill Downs Incorpor
ated and
Manasa Thimmegowda v. Big Fish Games, Inc. The $124.0 million settlement was paid on March 25, 2021. During 2022, the
Company received a $26.0 million tax refundff

related to the capia tal loss associated with this settlement.

5. PROPERTY AND EQUIPMENT

Property and equipment, net is comprised of the folff

lowing:

(i(( n millions)s
Grandstands and buildings
Equipment
Tracks and other improvements
Land

Furniturtt e and fiff xturtt es

Construcrr

tion in progress

Accumulated depreciation

Subtotal

Operating lease right-of-ff use assets

Total

December 31,

2022

2021

1,217.8
574.5

304.3

161.2

172.0

353.7

2,783.5

(837.1)

1,946.4

31.9

1,978.3

745.5
491.9

221.7

101.3

78.9

65.8

1,705.1

(736.7)

968.4

26.5

994.9

Depreciation expense was $109.0 million in 2022, $98.4 million in 2021 and $88.0 million in 2020 and is classififf ed in operating
expense in the accompanying Consolidated Statements of Comprehensive Income (Loss).

6. GOODWILL

Goodwill, by segment, is comprised of the folff

lowing:

(i(( n millions)s
Balance, December 31, 2020

Adjustments

Balance, December 31, 2021

Additions

Balance, December 31, 2022

Live and
Historical

TwinSpires

Gaming

All Other

Total

52.4

—
52.4

227.9
280.3

152.2

161.2

1.0 $

—
152.2

—
161.2

129.1
290.3

—
1.0

—
1.0 $

366.8

—
366.8

357.0
723.8

In 2022, we establa ished goodwill of $9.2 million related to the Ellis Park Transaction and $347.8 million related to the P2E
Transaction. Refeff r to Note 3 - Acquisitions forff more inforff mation on the Ellis Park and P2E Transactions.

We perforff med our annual goodwill impairment analysis as of April 1, 2022. We assessed goodwill forff
perforff ming qualitative or quantitative analyses forff
impairments were identififf ed in connection with our annual impairment testing.

impairment by
each reporting unit. Based on the results of these analyses, no goodwill

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Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

7. OTHER INTANGIBLE ASSETS

Other intangible assets, net is comprised of the folff

lowing:

(i(( n millions)s
Defiff nite-lived intangible assets:

Favorabla e contracts
Other
Customer relationships

Gaming licenses

Indefiff nite-lived intangible assets:

Trademarks
Gaming rights
Other

Total

December 31, 2022

December 31, 2021

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

11.0
10.2
4.7

5.1
31.0

(10.1) $
(5.5)
(3.3)

(2.5)
(21.4) $

0.9
4.7
1.4

2.6
9.6

11.0
10.4
4.7

5.1
31.2

(9.4) $
(4.6)
(2.8)

(2.3)
(19.1) $

125.7
2,256.5
—

2,391.8

1.6
5.8
1.9

2.8
12.1

47.7
288.2
0.1

348.1

During 2022 we establa ished indefiff nite-lived intangibles assets of $5.0 million forff
development of Terre Haute. We also establa ished indefiff nite-lived intangible assets of $82.2 million forff
related to the Chasers Transaction, as well as, $47.4 million forff
Ellis Park Transaction. We also establa ished indefiff nite-lived intangible assets of $1.9 billion forff
$75.9 million forff
Chasers, Ellis Park and P2E Transactions.

gaming rights associated with the planned
the gaming rights
trademarks related to the
the gaming rights and
the trademarks related to the P2E Transaction. Refeff r to Note 3 - Acquisitions forff more inforff mation on the

gaming rights and $3.6 million forff

Amortization expense forff
defiff nite-lived intangible assets was $4.7 million in 2022, $4.8 million in 2021, and $4.9 million in
2020, and is classififf ed in operating expense in the accompanying Consolidated Statements of Comprehensive Income (Loss).
annual license feff es forff Calder, which are being amortized to
We submitted payments of $2.3 million in 2022 and 2021 forff
expense over the annual license period.

Indefiff nite-lived intangible assets consist primarily of trademarks and state gaming rights in Indiana, Maine, Marylrr and,
Mississippi, Louisiana, Pennsylvania, Kentuct ky, New Hampshire, New York, Iowa, and Virginia.

Refeff r to Note 8, Asset Impairments, forff

inforff mation regarding intangible asset impairments recognized during 2022.

We perforff med our annual indefiff nite-lived intangible assets impairment analysis as of April 1, 2022, which included an
assessment of qualitative and quantitative faff ctors to determine whether it is more likely than not that the faff ir values of the
indefiff nite-lived intangible assets are less than the carryirr ng amount. We concluded that the faff ir values of our indefiff nite-lived
intangible assets exceeded their carryirr ng value other than impairments described in Note 8, Assets Impairments.

Futurtt e estimated aggregate amortization expense on existing defiff nite-lived intangible assets forff
is as folff

lows (in millions):

each of the next fiff ve fiff scal years

Years Ended
December 31,
2023

2024
2025
2026

2027

Estimated
Amortization
Expense

2.4

1.8

1.0
0.5

0.3

Futurtt e estimated amortization expense does not include additional payments of $2.3 million in 2023 and in each year thereaftff er
forff

the ongoing amortization of futff urt e expected annual Calder license feff es not yet incurred or paid.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

8. ASSET IMPAIRMENTS

Presque IsII le ImII paim rment 2022

During the quarter ended December 31, 2022, the Company evaluated whether it was more likely than not that any of the
Company's intangible assets, goodwill, or property and equipment, were impaired. The Company concluded that a trigger event
impairment testing occurred related to the Presque Isle Downs and Casino ("Presque Isle") gaming rights, trademark, and
forff
the reporting unit's goodwill due to the impact and uncertainty of current negative economic trends. Factors considered in this
evaluation included, among other things, the amount of the faff ir value over carryirr ng value frff om the annual impairment testing
perforff med as of April 1, 2022, changes in carryirr ng values, changes in discount rates, and the impact of negative economic
trends on cash flff ows.

Based on the 2022 trigger event, the Company updated the discount rate to reflff ect the increased uncertainty of the cash flff ows
and updated the projected cash flff ow stream. As a result, the Company recognized an impairment of $33.4 million in the four
th
quarter of 2022 forff

the Presque Isle gaming rights and trademark.

oaches
The faff ir value of the Presque Isle reporting unit's goodwill was determined under the market and income valuation appr
using inputs primarily related to discounted projected cash flff ows and price multiples of publicly traded comparabla e companies.

In accordance with Accounting Standards Codififf cation 350, Intangibles - Goodwill and Other, the Company perforff med the
impairment testing of the Presque Isle gaming rights and trademark prior to testing Presque Isle goodwill. Based on the trigger
event, the Company updated the discount rate to reflff ect the increased uncertainty of the cash flff ows and updated the project cash
flff ow stream. As a result, the Company did not recognize an impairment forff Presque Isle goodwill in the four
th quarter of 2022
because the faff ir value exceeded the carryirr ng value.

Othett

r ImII paim rmentstt

On Februarr
ryrr 24, 2022, the Company announced plans to exit the direct online Sports and Casino business. The Company will
maintain its retail Sports operations and pursue monetization of its online market access licenses. During the quarter ended
March 31, 2022, the Company evaluated whether this planned exit would indicate it is more likely than not that any of the
Company’s intangible assets, long-lived assets, current assets or property and equipment, were impaired. Based on the
Company’s evaluation, the Company concluded that a trigger event forff
impairment testing occurred related to certain
TwinSpires assets. As a result, the Company recorded a $4.9 million non-cash impairment charge related to certain assets in the
TwinSpires segment.

During the quarter ended December 31, 2021, the Company recorded a $4.1 million non-cash impairment charge related to
certain assets in the TwinSpires segment due to changes in expectations of futff urt e realization of certain third-party market access
royalty prepayments related to our New Jersey sports betting and iGaming that resulted in projected futff urtt e cash flff ows being less
than carryirr ng value in the four

th quarter of 2021.

During the quarter ended June 30, 2021, the Company recorded an $11.2 million non-cash impairment charge related to certain
assets at Churchill Downs Racetrack included in our Live and Historical Racing segment. The impairment was due to a change
in the Churchill Downs Racetrack capia tal plans and the Company's planned use of these assets.

Presque IsII le ImII paim rment 2020

During the quarter ended March 31, 2020, the Company evaluated whether events or circumstances changed that would
indicate it is more likely than not that any of the Company's intangible assets, goodwill, or property and equipment, were
impaired. The Company concluded that a trigger event forff
impairment testing occurred related to the Presque Isle gaming
rights, trademark, and the reporting unit's goodwill due to the impact and uncertainty of the COVID-19 global pandemic.

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The initial faff ir value of Presque Isle gaming rights in the fiff rst quarter of 2019 was determined using the Greenfiff eld Method,
oach methodology that calculates the present value based on a projected cash flff ow stream. This
which is an income appr
method assumes that the Presque Isle gaming rights provide the opportuni
ty to develop a casino and online wagering platforff m
in a specififf ed region, and that the present value of the projected cash flff ows are a result of the realization of advantages
contained in these rights. Under this methodology, the acquirer is expected to absa orbr all start-up costs, as well as incur all
expenses pertaining to the acquisition and / or the creation of all tangible and intangible assets. The estimated futff urt e revenue,
operating expenses, start-up costs, and discount rate were the primaryrr

inputs in the valuation.

Based on the trigger event, the Company updated the discount rate to reflff ect the increased uncertainty of the cash flff ows and
updated the projected cash flff ow stream. As a result, the Company recognized an impairment of $15.0 million in fiff rst quarter of
2020 forff

the Presque Isle gaming rights.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

9. INCOME TAXES

Components of the provision (benefiff t) forff

income taxes are as folff

lows:

(i(( n millions)s
Current provision (benefiff t):

Federal
State and local
Foreign

Defeff rred provision:

Federal
State and local
Foreign

Income tax provision (benefiff t)

Years Ended December 31,
2021

2020

2022

41.0
19.7
—
60.7

79.9
28.8
—
108.7
169.4

66.1
18.5
0.1
84.7

7.5
2.3
—
9.8
94.5

Income frff om continuing operations beforff e provision forff

income taxes were as folff

lows:

(i(( n millions)s
Domestic

Foreign

Income frff om continuing operations beforff e provision forff
income taxes

Years Ended December 31,
2021

2020

2022

608.9

(0.1)

343.7

(0.1)

608.8

343.6

(38.7)
3.0
0.1
(35.6)

28.7
1.5
0.1
30.3
(5.3)

8.2

(0.2)

8.0

Our income tax provision (benefiff t) is diffff eff rent frff om the amount computed by appl
income frff om continuing operations beforff e taxes as folff

lows:

ying the feff deral statutt oryrr

income tax rate to

(i(( n millions)s

Years Ended December 31,
2021

2020

2022

Federal statutt oryrr

tax on earnings beforff e income taxes

127.9

State income taxes, net of feff deral income tax benefiff t

Non-deductible offff iff cer's compensation

Valuation allowance - state and forff eign net operating losses

Uncertain tax positions

Re-measurement of defeff rred taxes
Windfaff ll deduction frff om equity compensation

Net operating loss carryrr back - CARES Act

Other

32.6

7.6

2.5

2.3

1.3
(2.3)

—

(2.5)

72.1

15.8

6.4

1.8

0.1

(1.5)
(1.4)

—

1.2

Income tax provision (benefiff t)

169.4

94.5

1.7

(0.6)

3.5

1.1

1.7

1.9
(1.3)

(13.3)

—

(5.3)

The CARES Act provided, among other things, that any net operating loss arising in a tax year beginning in 2018, 2019 or 2020
may be carried back fiff ve years or carried forff ward indefiff nitely, offff sff etting up to 100% of taxabla e income in tax years beginning
claim in 2021 frff om carryirr ng back our 2020 net operating loss to a year beforff e the
beforff e 2021. The Company fiff led a refund
statutt oryrr corpor
ied to this net
operating loss, the Company recognized an income tax benefiff t of $13.3 million forff

ate tax rate was reduced frff om 35% to 21% by the Tax Act. Due to the higher statutt oryrr

the year ended December 31, 2020.

a
rate appl

Components of our defeff rred tax assets and liabia lities were as folff

lows:

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

(i(( n millions)s
Defeff rred tax assets:

§ 163(j(( ) interest expense limitation carryfrr orff ward
Lease liabia lities
Net operating losses and credits carryfrr orff ward
Defeff rred liabia lities
Defeff rred compensation plans
Defeff rred income
Research and experimental expenditurt es

Defeff rred tax assets
Valuation allowance
Net defeff rred tax asset
Defeff rred tax liabia lities:

Property and equipment in excess of tax basis

Equity investments in excess of tax basis

Intangible assets in excess of tax basis

Right-of-ff use assets
Other

Defeff rred tax liabia lities

Net defeff rred tax liabia lity

December 31,

2022

2021

18.2

12.6
8.1
7.4
7.0
3.6

3.0
59.9
(5.7)
54.2

158.7

141.6

78.1

12.3

4.3

395.0

(340.8) $

—

10.2
8.8
5.1
6.9
4.7

—
35.7
(3.2)
32.5

69.7

128.9

74.1

9.9

2.8

285.4

(252.9)

As of December 31, 2022, we had U.S. state and forff eign net operating losses with tax values of $7.7 million and $0.5 million,
respectively. We have recorded a valuation allowance of $5.7 million due to the faff ct that it is unlikely that we will generate
income in certain state and forff eign jurisdictions which is necessaryrr
to utilize the defeff rred tax assets. We also had U.S. state tax
credits with a tax value of $1.3 million that do not expire which we expect to fulff

ly utilize.

The Internal Revenue Service has completed audits through 2012. Tax years 2019 and aftff er are open to examination. Tax year
of 2015 and 2018 tax frff om carryirr ng back
2015 and 2018 are open to examination as a result of the Company's claim forff
its 2020 net operating loss and 2021 capia tal loss pursuant to the CARES Act.

ff
refund

As of December 31, 2022, we had appr
oximately $6.4 million of total gross unrecognized tax benefiff ts, excluding interest of
$0.5 million. If the total gross unrecognized tax benefiff ts were recognized, there would be a $5.8 million effff eff ct to the annual
oximately $2.8 million during the next
effff eff ctive tax rate. We anticipate a decrease in our unrecognized tax positions of appr
twelve months primarily due to expected settlements with tax authorities and the expiration of statuttt es of limitation.

A reconciliation of the beginning and ending amount of unrecognized tax benefiff ts is as folff

lows:

(i(( n millions)s
Balance as of Januaryrr 1

Additions forff

tax positions related to the current year

Additions forff

tax positions of prior years

Reductions forff

tax positions of prior years

Balance as of December 31

2022

2021

2020

3.9

0.1
2.9

(0.5)
6.4

3.9

0.1
1.0

(1.1)
3.9

1.8

0.1
2.6

(0.6)
3.9

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Churchill Downs Incorpor

ated

10. SHAREHOLDERS’ EQUITY

StSS octt k Repuee

rchase PrPP ograms

Notes to Consolidated Financial Statements

On October 30, 2018, the Board of Directors of the Company appr
oved a common stock repurchase program of up to $300.0
a
million ("2018 Stock Repurchase Program"). The 2018 Stock Repurchase Program was in effff eff ct until September 29, 2021 and
had unused authorization of $97.9 million.

On September 29, 2021, the Board of Directors of the Company appr
oved a common stock repurchase program of up to
$500.0 million ("2021 Stock Repurchase Program"). Thhe 2021 Stockk Repurchhase Pr gogram iincll dudes a dnd iis not iin addidditiion to
a yny unspent amount remaii ini gng
dunder thhe priior 2018 Stockk Purchhase Pr gogram authhoriizatiion. Repurchases may be made at
management’s discretion frff om time to time on the open market (either with or without a 10b5-1 plan) or through privately
negotiated transactions. The repurchase program has no time limit and may be suspended or discontinued at any time. We had
$270.2 million of repurchase authority remaining under this program on December 31, 2022.

We repurchased the folff

lowing shares under the 2018 and 2021 Stock Repurchase Programs:

(i(( n millions, exee cepte

share data)

2022

For the year ending December 31,
2021

2020

Repurchase Program

2021 Stock Repurchase Program

873,922 $

2018 Stock Repurchase Program

Total

—

873,922 $

Aggregate
Purchase
Price

175.5

—

175.5

Aggregate
Purchase
Price

54.4

49.2

226,232 $

245,132

— $

235,590

471,364 $

103.6

235,590 $

Aggregate
Purchase
Price

—

27.9

ThTT e Duchossoisii GrGG oupu ("TDTT G")" ShSS are Repuee

rchase

ryrr 1, 2021, the Company entered into an agreement (the "Stock Repurchase Agreement") with an affff iff liate of TDG to
On Februarr
repurchase 1,000,000 shares of the Company’s common stock forff
an
aggregate purchase price of $193.9 million. The repurchase of shares of common stock frff om TDG pursuant to the Stock
Repurchase Agreement was appr
oved by the Company's Board of Directors separately frff om, and did not reduce the authorized
amount remaining under, the existing common stock repurchase program. The Company repurchased the shares using availabla e
cash and borrowings under the Revolver (as defiff ned in Note 12, Debt).
11. STOCK-BASED COMPENSATION PLANS

$193.94 per share in a privately negotiated transaction forff

Our total compensation expense, which includes expense related to restricted stock awards, restricted stock unit awards,
perforff mance share unit awards, and stock options associated with our employee stock purchase plan, was $31.8 million in 2022,
$27.8 million in 2021, and $23.7 million in 2020. We recorded a tax benefiff t related to stock-based compensation expense of
$1.6 million in 2022, $1.5 million in 2021, and $1.9 million in 2020. Our stock-based employee compensation plans are
described below.

2016 Omnibus StSS octt k InII centitt ve PlPP anll

We have a stock-based employee compensation plan with awards outstanding under the Churchill Downs Incorpor
ated 2016
Omnibus Stock Incentive Plan (the "2016 Plan") and Executive Long-Term Incentive Compensation Plan, which was adopted
pursuant to the 2016 Plan. The 2016 Plan is intended to advance our long-term success by encouraging stock ownership among
key employees and the Board of Directors. Awards may be in the forff m of stock options, stock appr
eciation rights, restricted
stock awards ("RSA"), restricted stock units ("RSU"), perforff mance share units ("PSU"), perforff mance units, or perforff mance
cash. The 2016 Plan has a minimum vesting period of one year forff

awards granted.

Restrtt ictett d StSS octt k, Restrtt ictett d StSS octt k UnUU itii stt ,s and PePP rfr orff mrr ance ShSS are UnUU itii stt

The 2016 Plan permits the award of RSAs, RSUs, or PSUs to directors and key employees responsible forff
the management,
growth and protection of our business. The faff ir value of RSAs and RSUs that vest solely based on continued service under the
Plan is determined by the product of the number of shares granted and the grant date market price of our common stock.

RSAs and RSUs granted to employees under the 2016 Plan generally vest either in fulff
l upon three years frff om the date of grant
or on a pro rata basis over a three-year term. RSAs are legally issued common stock at the time of grant, with certain
restrictions placed on them. RSUs granted to employees are converted into shares of our common stock at vesting. The RSUs

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

granted to directors under the 2016 Plan generally vests in fulff
are converted into shares of our common stock at the time of the director's retirement.

l upon one year frff om the date of grant. RSUs granted to directors

In 2020, 2021, and 2022, the Company granted three-year perforff mance and total shareholder returt n ("TSR") PSU awards (the
the PSU Awards are: (1) a
"PSU Awards") to certain named executive offff iff cers ("NEOs"). The two perforff mance criteria forff
cumulative Adjusted EBITDA target that was set at the beginning of the plan perforff mance period forff
the three-year period; and
the three individual years that is set annually at the
(2) a cash flff ow metric that is the aggregate of the cash flff ow targets forff
beginning of each year. The cash flff ow metric is defiff ned as cash flff ow frff om operating activities and discontinued operations
excluding the change in restricted cash, plus distributions of capia tal frff om equity investments less capia tal maintenance
expenditurt es. The Compensation Committee of the Board of Directors (the "Compensation Committee") can make adjustments
opriate to these metrics. Measurement against these criteria will be determined against a payout curve
as it may deem appr
which provides up to 200% of perforff mance share units based on the original award.

The PSU Awards may be adjusted based on the Company’s TSR perforff mance relative to the TSR perforff mance during the
perforff mance period of the companies remaining in the RusRR sell 2000 index and RusRR sell 1000 index beginning with 2022 grants
at the end of the perforff mance period as folff

lows:

The PSU Awards will increase by 25% if the Company’s TSR is in the top quartile;

The PSU Awards will decrease by 25% if the Company’s TSR is in the bottom quartile; and

The PSU Awards will not change if the Company’s TSR is in the middle two quartiles.

The maximum number of PSU Awards, including the impact of the TSR perforff mance, that can be earned forff
period is 250% of the original award.

a perforff mance

On Februarr

ryrr 12, 2020, the Compensation Committee offff eff red, and the NEOs accepted, to settle the 2017 PSU Awards in cash.

In October 2018, the Company granted a special equity award to two NEOs ("7-Year Grant") consisting of PSU Awards that
may be adjusted up to 200% based on the Company's relative TSR perforff mance versus the RusRR sell 2000 over a three-year
years
period ending October 29, 2021, and service-based RSU awards, both of which vest in 25% annual increments over four
beginning on the four
ly vested. The perforff mance period ended on
October 29, 2021, and the TSR perforff mance was 200%.

th anniversaryrr of the grant date, totaling seven years to be fulff

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PSU Awards is determined using the Monte Carlo valuation methodology, which
The total compensation cost recognized forff
the PSU
faff ctors in the value of the TSR when determining the grant date faff ir value of the award. Compensation cost forff
Awards is recognized during the three-year perforff mance and service period based on the probabla e achievement of the two
perforff mance criteria, with the exception of the 7-Year Grant, which compensation cost is recognized during the seven-year
service period. All PSUs awards are converted into shares of our common stock at the time the award value is fiff nalized.

A summaryrr of the 2022 RSUs, and PSUs granted to certain NEOs, employees, and the Board of Directors is presented below
(shares/uni

ts in thousands):

Grant Year
2022

Award Type
RSU

2022
2022

PSU
RSU

Number of
Units
Awarded(1)
62

Vest equally over three service periods ending in 2025

Vesting Terms

34
5

Three-year perforff mance and service period ending in 2024
One year service period ending in 2023

(1) PSUs presented are based on the target number of units forff

the original PSU grant.

Activity forff

our RSAs, RSUs, and PSUs is presented below (shares/uni

ts in thousands):

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

(i(( n thousands, exee cepte

grant date values)s

Balance, December 31, 2019

Granted
Perforff mance adjustment(1)
Vested

Canceled/forff

feff ited

Balance, December 31, 2020

Granted
Perforff mance adjustment(1)
Vested

Canceled/forff

feff ited

Balance, December 31, 2021

Granted
Perforff mance adjustment(1)
Vested

Canceled/forff

feff ited

Balance, December 31, 2022

PSUs

RSAs and RSUs

Total

Number of
Shares /
Units

Weighted
Average
Grant Date
Fair Value
72.84
$
314
182.45
$
37
90.73
$
41
90.73
(90) $

Number of
Shares /
Units

Weighted
Average
Grant Date
Fair Value
85.07
$
265
150.12
94
$
—
— $
90.01
(121) $

Number of
Shares /
Units

Weighted
Average
Grant Date
Fair Value
78.45
$
579
159.30
$
131
90.73
$
41
90.32
(211) $

— $
$
302
$
27
258
$
(108) $

— $

479

34 $

47 $

(184) $

(6) $

370 $

—
83.40
254.29
68.87
92.90

—

82.99

220.25

182.45

115.32

213.8

90.07

(3) $
$
235
68
$
— $
(112) $

(12) $

179

— $

(92) $

(6) $

148 $

121.39
107.90
211.11
—
121.77

160.42

135.01

222.16

—

158.89

204.71

160.18

(3) $
$
537
$
95
258
$
(220) $

(12) $

658

101 $

47 $

(276) $

(12) $

518 $

121.39
94.14
223.25
68.87
107.63

160.42

90.27

221.52

182.45

129.65

208.82

110.13

(1) Adjustment to number of target units awarded forff PSUs based on achievement of underlying perforff mance goals.

The faff ir value of shares and units vested was $56.9 million in 2022, $45.4 million in 2021, and $36.9 million in 2020.

A summaryrr of total unrecognized stock-based compensation expense related to RSAs, RSUs, and PSUs (based on current
perforff mance estimates), on December 31, 2022, is presented below:

(i(( n millions, exee cepte

yearsrr )s

Unrecognized expense:

RSU

PSU

Total

EmEE plm oyll

ee StSS octt k Purchase PlPP anll

December 31, 2022

Weighted Average
Remaining Vesting
Period (Years)

8.8

13.2

22.0

1.52

1.71

1.63

Under the Employee Stock Purchase Plan (the "ESP Plan"), we are authorized to sell, pursuant to short-term stock options,
shares of our common stock to our fulff
l-time and qualifyiff ng part-time employees at a discount frff om our common stock’s faff ir
market value. The ESP Plan operates on the basis of recurring, consecutive one-year periods. Each period commences on
August 1 and ends on the folff
any year
included in our accompanying Consolidated Statements of Comprehensive Income (Loss).

lowing July 31. Compensation expense related to the ESP Plan was not material forff

Notes to Consolidated Financial Statements

12. DEBT

The folff

lowing tabla e presents our total debt outstanding:

Churchill Downs Incorpor

ated

(i(( n millions)s

Term Loan B due 2024
Term Loan B-1 due 2028
Term Loan A due 2027
Revolver
2027 Senior Notes
2028 Senior Notes
2030 Senior Notes
Total debt

Current maturt

ities of long-term debt

Total debt, net of current maturtt

ities

(i(( n millions)s

Term Loan B due 2024

Term Loan B-1 due 2028

2027 Senior Notes

2028 Senior Notes

Total debt

Current maturt

ities of long-term debt

Total debt, net of current maturtt

ities

CrCC editii Agreement

Outstanding
Principal

December 31, 2022
Issuance Costs
and Fees

Long-Term Debt,
Net

380.0
294.7
800.0
664.1
600.0
700.0
1,200.0
4,638.8
47.0
4,591.8

1.6
3.1
5.5
—
4.7
1.6
16.6
33.1
—
33.1

378.4
291.6
794.5
664.1
595.3
698.4
1,183.4
4,605.7
47.0
4,558.7

Outstanding
Principal

December 31, 2021
Issuance Costs
and Fees

Long-Term Debt,
Net

384.0

297.8

600.0

700.0

1,981.8

7.0

2.4

3.8

5.7

1.9

13.8

—

1,974.8

13.8

381.6

294.0

594.3

698.1

1,968.0

7.0

1,961.0

On December 27, 2017, we entered into a senior secured credit agreement ("2017 Credit Agreement") with a syndicate of
a $700.0 million senior secured revolving credit faff cility due 2024 (the
lenders. The 2017 Credit Agreement provided forff
"Revolver") and a $400.0 million senior secured term loan B due 2024 (the "Term Loan B").
Included in the maximum
borrowing of $700.0 million under the Revolver was a letter of credit sub faff cility not to exceed $50.0 million and a swing line
commitment up to a maximum principal amount of $50.0 million.

On April 28, 2020, the Company entered into an amendment to the 2017 Credit Agreement (as amended, the "Credit
a fiff nancial covenant relief period through the date on which the Company delivered the
Agreement"), which provided forff
the fiff scal quarter ended June 30, 2021, subject to
Company's quarterly fiff nancial statements and compliance certififf cate forff
certain exceptions (the "Financial Covenant Relief Period"). On Februarr
ryrr 1, 2021, the Company entered into an amendment to
increase the amount of certain otherwise restricted payments permitted frff om $26.0 million to $226.0 million during the
Financial Covenant Relief Period.

On March 17, 2021, the Company entered into the Incremental Joinder Agreement No. 1 (the "Joinder") to its Credit
Agreement which provided $300.0 million in New Term Loan Commitments ("Term Loan B-1") as a new tranche of term loans
ity date of March 17, 2028.
under the existing Credit Agreement (as conforff med to recognize the new loan) and carries a maturt

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K
K

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

The Company capia talized $3.5 million of debt issuance costs associated with the Joinder which are being amortized as interest
expense over the 7-year term of the Term Loan B-1.

On April 13, 2022, the Company amended the Credit Agreement to extend the maturt
ity date of its existing Revolver to April
13, 2027, to increase the commitments under the existing Revolver frff om $700.0 million to $1.2 billion, and to increase the
swing line commitment frff om $50.0 million to $100.0 million. The amendment also provides forff
a senior secured Delayed
Draw Term Loan A due April 13, 2027 in the amount of $800.0 million, which was drawn on November 1, 2022 as part of the
the P2E Transaction. Refeff r to Note 3, Acquisitions forff more inforff mation regarding the P2E Transaction. The
fiff nancing forff
Company capia talized $3.2 million of debt issuance costs associated with the Revolver commitment increase and $6.4 million of
debt issuance costs associated with the Delayed Draw Term Loan A which are being amortized as interest expense over the 5-
year term.

The Revolver and Delayed Draw Term Loan A bear interest at the Secured Overnight Financing Rate ("SOFR") plus 10 basis
points, plus a variabla e appl
icabla e margin which is determined by the Company's net leverage ratio. As of December 31, 2022,
icabla e margin was 125 basis points which was based on the pricing grid in the Credit Agreement. During 2022, we
that appl
a
have borrowed $664.1 million on our Revolver which provided the Company with fiff nancing forff
the Chasers, Ellis Park, and
P2E Transactions. Refeff r to Note 3, Acquisitions forff more regarding the Chasers, Ellis Park and P2E Transactions. The
Company had $524.8 million availabla e borrowing capaa
city, aftff er consideration of $11.1 million in outstanding letters of credit,
under the Revolver as of December 31, 2022.

June 30, 2023. The Credit Agreement includes a general process
The phase-out of LIBOR in existing debt agreements is set forff
forff
establa ishing an alternative refeff rence rate to the extent LIBOR is phased out. The Company is in the process of transitioning
its fiff nancing frff om LIBOR to alternative refeff rence rates. These transition activities are not expected to have a material impact
on the Company’s fiff nancial statements.

Interest coverage ratio

Consolidated total secured net leverage ratio

Actuat

l as of

December 31, 2022

6.6 to 1.0

0.9 to 1.0

Requirement

> 2.5 to 1.0

< 4.0 to 1.0

The Company was compliant with all appl

icabla e covenants on December 31, 2022.

2027 SeSS nior NotNN ett s

On March 25, 2019, we completed an offff eff ring of $600.0 million in aggregate principal amount of 5.50% Senior Unsecured
Notes that maturt e on April 1, 2027 (the "2027 Senior Notes") in a private offff eff ring to qualififf ed institutt
ional buyers pursuant to
RulRR e 144A that is exempt frff om registration under the Securities Act of 1933, as amended (the "Securities Act"), and to certain
non-U.S. persons in accordance with Regulation S under the Securities Act. The 2027 Senior Notes were issued at par, with
interest payabla e on April 1st and October 1st of each year, commencing on October 1, 2019. The Company used the net
proceeds frff om the offff eff ring to repay the then-outstanding balance on the Revolver portion of our Credit Agreement.
In
connection with the offff eff ring, we capia talized $8.9 million of debt issuance costs which are being amortized as interest expense
over the term of the 2027 Senior Notes.

tee. The Company may redeem some or all of the 2027 Senior Notes at any time at redemption prices set forff

The 2027 Senior Notes were issued pursuant to an indenturtt e, dated March 25, 2019 (the "2027 Indenturt e"), among the
Company, certain subsidiaries of the Company as guarantors (the "2027 Guarantors"), and U.S. Bank National Association, as
th in the 2027
trusrr
Indenturt e. The terms of the 2027 Indenturt e, among other things, limit the abia lity of the Company to: (i) incur additional debt
and issue prefeff rred stock, (ii) pay dividends or make other restricted payments, (iii) make certain investments, (iv) create liens,
(v) allow restrictions on the abia lity of certain of our subsidiaries to pay dividends or make other payments, (vi) sell assets, (vii)
merge or consolidate with other entities, and (viii) enter into transactions with affff iff liates.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

In connection with the issuance of the 2027 Senior Notes, the Company and the 2027 Guarantors entered into a Registration
resale that are not frff eely tradabla e 366 days
Rights Agreement to register any 2027 Senior Notes under the Securities Act forff
frff om March 25, 2019.

2028 SeSS nior NotNN ett s

On December 27, 2017, we completed an offff eff ring of $500.0 million in aggregate principal amount of 4.75% Senior Unsecured
Notes that maturt e on Januaryrr 15, 2028 (the "Existing 2028 Notes") in a private offff eff ring to qualififf ed instituttt
ional buyers
pursuant to RulRR e 144A that is exempt frff om registration under the Securities Act, and to certain non-U.S. persons in accordance
with Regulation S under the Securities Act. The Existing 2028 Notes were issued at par, with interest payabla e on Januaryrr 15th
and July 15th of each year, commencing on July 15, 2018. The Company used the net proceeds frff om the offff eff ring to repay a
In connection with the offff eff ring, we capia talized
portion of our $600.0 million 5.375% Senior Unsecured Notes due in 2021.
$7.7 million of debt issuance costs which are being amortized as interest expense over the term of the Existing 2028 Notes.

On March 17, 2021, the Company completed an offff eff ring of $200.0 million in aggregate principal amount of 4.75% Senior
ional
Unsecured Notes that maturt e on Januaryrr 15, 2028 (the "Additional 2028 Notes") in a private offff eff ring to qualififf ed institutt
buyers pursuant to RulRR e 144A that is exempt frff om registration under the Securities Act, and to certain non-U.S. persons in
accordance with Regulation S under the Securities Act. The Additional 2028 Notes were offff eff red under the indenturt e dated as
of December 27, 2017, governing the $500.0 million aggregate principal amount of 4.75% Senior Unsecured Notes due 2028
and forff m a part of the same series forff
es of the indenturt e. In connection with the offff eff ring, we capia talized $3.4 million of
debt issuance costs which are being amortized as interest expense over the term of the Additional 2028 Notes. Upon
completion of this offff eff ring, the aggregate principal amount outstanding of the Existing 2028 Notes, together with the
Additional 2028 Notes (collectively, the "2028 Senior Notes"), is $700.0 million.

rr
purpos

The Additional 2028 Notes were issued at 103.25% of the principal amount, plus interest deemed to have accruerr d frff om Januaryrr
15, 2021, with interest payabla e on Januaryrr 15th and July 15th of each year, commencing on July 15, 2021. The 2028 Senior
Notes will vote as one class under the indenturt e governing the 2028 Senior Notes. The 3.25% premium is being amortized
through interest expense, net over the term of the Additional 2028 Notes.

The Company used the net proceeds frff om the Additional 2028 Notes and the Term Loan B-1: (i) to repay indebtedness
outstanding under our Revolver, (ii) to fund
related transaction feff es and expenses, and (iii) forff working capia tal and other
general corpor

ate purpos

es.

tee. The Company may redeem some or all the 2028 Senior Notes at redemption prices set forff

In connection with the issuance of the Additional 2028 Notes, the Company and the 2028 Guarantors entered into a Registration
Rights Agreement to register any 2028 Senior Notes under the Securities Act forff
resale that are not frff eely tradabla e 366 days
frff om March 17, 2021.

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2030 SeSS nior NotNN ett s

On April 13, 2022, a wholly-owned subsidiaryrr of the Company completed an offff eff ring of $1.2 billion in aggregate principal
amount of 5.75% Senior Unsecured Notes that maturt e on April 13, 2030 (the "2030 Senior Notes") in a private offff eff ring to
qualififf ed institutt
ional buyers pursuant to RulRR e 144A that was exempt frff om registration under the Securities Act, and to certain
non-U.S. persons in accordance with Regulation S under the Securities Act. The offff eff ring of the 2030 Senior Notes was part of
the fiff nancing utilized forff
the P2E Transaction. In connection with the offff eff ring, we capia talized $18.3 million of debt issuance
costs which are being amortized as interest expense over the term of the 2030 Senior Notes. The Company held the net
proceeds of this transaction of $1.2 billion in escrow until the proceeds were utilized to complete the P2E Transaction on
November 1, 2022, at which time CDI assumed the obligation and became the Issuer.

dunder thhe ii dndenturt e ggover ini gng thhe 2030 Se inior Notes.

Thhe Issuer mayy reddeem some of or allll thhe 2030 Se inior Notes at a yny tiime priior to Apriill 1, 2025, at reddemptiion priices set forff
thhe 2030 Offff eff rii gng Memora dndum.

thh iin

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

In connection with the issuance of the 2030 Senior Notes, the Escrow Issuer and the guarantors of the 2030 Senior Notes
resale that are not
entered into a Registration Rights Agreement to register any 2030 Senior Notes under the Securities Act forff
frff eely tradabla e 366 days frff om April 13, 2022.

Futurtt e aggregate maturt

ities of total debt are as folff

lows (in millions):

Years Ended December 31,

2023

2024
2025

2026
2027
Thereaftff er
Total

47.0

419.0
43.0

43.0
1,907.0
2,179.8
4,638.8

13. REVENUE FROM CONTRARR CTS WITH CUSTOMERS

PePP rfr orff mrr ance Oblill gat

itt ons

As of December 31, 2022, our Live and Historical Racing segment had remaining perforff mance obligations on contracts with a
duration greater than one year relating to television rights, sponsorships, personal seat licenses, and admissions, with an
aggregate transaction price of $154.4 million. The revenue we expect to recognize on these remaining perforff mance obligations
is $46.0 million in 2023, $39.6 million in 2024, $30.5 million in 2025, and the remainder thereaftff er.

As of December 31, 2022, our remaining perforff mance obligations on contracts with a duration greater than one year in
segments other than Live and Historical Racing were not material.

ConCC trtt act Assetstt and ConCC trtt act Liabilii ill tii itt es

Contract assets were not material as of December 31, 2022 and 2021.

Contract liabia lities were $58.7 million as of December 31, 2022 and $64.9 million as of December 31, 2021. Contract liabia lities
are included in current defeff rred revenue, non-current defeff rred revenue, and accruerr d expense and other current liabia lities in the
accompanying Consolidated Balance Sheets. Contract liabia lities primarily relate to our Live and Historical Racing segment.
The decrease in contract liabia lities frff om December 31, 2021 to December 31, 2022 was due to the recognition of revenue forff
fiff lled perforff mance obligations. We recognized $49.9 million of revenue during the year ended December 31, 2022 that was
fulff
included in the contract liabia lities balance on December 31, 2021. We recognized $33.0 million of revenue during the year
ended December 31, 2021 that was included in the contract liabia lities balance on December 31, 2020.

Disii aggregat

itt on of Revenue

The Company has included its disaggregated revenue disclosures as folff

lows:

•

For the Live and Historical Racing segment, revenue is disaggregated between Churchill Downs Racetrack and
historical racing properties given that our racing faff cilities revenues primarily revolve around live racing events while
is also
our historical racing properties revenues primarily revolve around historical racing.
c economic faff ctors that affff eff ct the revenue of service offff eff rings. Within
disaggregated by location given the geographi
the Live and Historical racing segment, revenue is furff
ther disaggregated between live and simulcast racing, historical
racing, racing event-related services, and other services.

This segment

For the TwinSpires segment, revenue is disaggregated between live and simulcast racing, gaming, and other services.

For the Gaming segment, revenue is disaggregated by location given the geographi
a
revenue of Gaming service offff eff rings. Within the Gaming segment, revenue is furff
simulcast racing, racing event-related services, gaming, and other services.

c economic faff ctors that affff eff ct the
ther disaggregated between live and

We believe that these disclosures depict how the amount, naturtt e, timing, and uncertainty of cash flff ows are affff eff cted by
economic faff ctors. The tabla es below present net revenue frff om external customers and intercompany revenue frff om each of our
segments:

(i(( n millions)s
Net revenue frff om external customers:

Live and Historical Racing:
Churchill Downs Racetrack
Louisville
Northern Kentuct ky
Southwestern Kentuct ky
Western Kentuct ky
Virginia
New Hampshire

Total Live and Historical Racing

TwinSpires:

Gaming:
Florida
Iowa
Louisiana
Maine
Marylrr and
Mississippi
New York
Pennsylvania

Total Gaming

All Other

Net revenue frff om external customers

Intercompany net revenues:
Live and Historical Racing
TwinSpires
Gaming
All Other
Eliminations

Intercompany net revenue

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Years Ended December 31,

2022

2021

2020

196.8
169.9
46.1
131.4
4.5
62.4
3.5
614.6

436.4

106.2
15.6
140.8
114.4
105.3
101.8
30.9
140.9
755.9
2.9
1,809.8

31.8
5.2
5.9
0.4
(43.3)

128.1
154.3
26.0
100.7
—
—
—
409.1

451.4

100.0
—
133.6
99.8
100.6
117.3
—
144.1
695.4
41.3
1,597.2

21.5
6.4
3.0
7.9
(38.8)

— $

63.3
79.5
10.2
16.6
—
—
—
169.6

430.1

51.8
—
97.6
44.9
60.2
87.0
—
93.8
435.3
19.0
1,054.0

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19.2
5.5
2.5
7.8
(35.0)
—

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Year Ended December 31, 2022

Live and
Historical
Racing

TwinSpires

Gaming

Total
Segments

All Other

Total

66.8 $

367.4 $

28.1 $

462.3 $

— $

374.1

129.8

3.5

40.4

—

28.2

40.8

9.8

1.8

647.4

68.8

383.9

131.6

679.1

150.0

—

2.9

462.3

383.9

131.6

679.1

152.9

614.6 $

436.4 $

755.9 $

1,806.9 $

2.9 $

1,809.8

Year Ended December 31, 2021

Live and
Historical
Racing

TwinSpires

Gaming

Total
Segments

All Other

Total

64.0 $

380.7 $

28.2 $

472.9 $

29.7 $

253.0

68.5

—

23.6

—

34.8

35.9

—

1.2

622.0

44.0

253.0

69.7

656.8

103.5

—

7.0

—

4.6

502.6

253.0

76.7

656.8

108.1

409.1 $

451.4 $

695.4 $

1,555.9 $

41.3 $

1,597.2

Year Ended December 31, 2020

Live and
Historical
Racing

TwinSpires

Gaming

Total
Segments

All Other

Total

46.5 $

387.5 $

22.9 $

456.9 $

18.2 $

475.1

93.6

21.0

—

8.5

—

11.3

31.3

—

3.4

381.3

27.7

93.6

24.4

392.6

67.5

—

0.3

—

0.5

93.6

24.7

392.6

68.0

169.6 $

430.1 $

435.3 $

1,035.0 $

19.0 $

1,054.0

(i(( n millions)s

Net revenue frff om external customers

Pari-mutuet

Live and simulcast racing
Historical racing(a)

Racing event-related services
Gaming(a)
Other(a)
Total

(i(( n millions)s

Net revenue frff om external customers

Pari-mutuet

Live and simulcast racing
Historical racing(a)

Racing event-related services
Gaming(a)
Other(a)
Total

(i(( n millions)s

Net revenue frff om external customers

Pari-mutuet

Live and simulcast racing
Historical racing(a)

Racing event-related services
Gaming(a)
Other(a)
Total

(a)

Food and beverage, hotel, and other services furff nished to customers forff
frff ee as an inducement to wager or through the
redemption of our customers' loyalty points are recorded at the estimated standalone selling prices in Other revenue
with a corresponding offff sff et recorded as a reduction in historical racing pari-mutuet
l revenue forff HRMs or gaming
revenue forff
our casino properties. These amounts were $33.9 million in 2022, $20.9 million in 2021, and
$13.1 million in 2020.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

14. OTHER BALANCE SHEET ITEMS

Accountstt receivablell

Accounts receivabla e is comprised of the folff

lowing:

(i(( n millions)s
Trade receivabla es
Simulcast and online wagering receivabla es

Other receivabla es

Allowance forff
Total

doubtfulff

accounts

December 31,

2022

2021

12.5
54.1
20.6

87.2
(5.7)
81.5

We recognized bad debt expense of $2.3 million in 2022, $3.2 million in 2021 and $2.5 million in 2020.

Accrued expe

nses and othtt er current lill abi

lii ill tii itt es

Accruerr d expenses and other current liabia lities consisted of the folff

lowing:

(i(( n millions)s
Account wagering deposits liabia lity

Accruerr d salaries and related benefiff ts

Purses payabla e

Accruerr d interest

Accruerr d fiff xed assets
Other

Total

December 31,

2022

2021

57.8

39.6

46.1

47.8

39.5

130.2

361.0

7.6
29.6
10.5

47.7
(5.4)
42.3

47.5

39.9

28.6

23.9

17.1

74.7

231.7

15. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES

Investments in and advances to unconsolidated affff iff liates as of December 31, 2022 and 2021 primarily consisted of a 61.3%
interest in Midwest Gaming Holdings, LLC ("Midwest Gaming"), the parent company of Rivers Casino Des Plaines ("Rivers
Des Plaines"), a 50% interest in Miami Valley Gaming ("MVG"), and other immaterial joint venturt es.

Riversrr Des PlPP aill nii es

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On March 5, 2019, the Company completed the acquisition of certain ownership interests of Midwest Gaming, the parent
oximately 42% of Midwest Gaming frff om affff iff liates and co-investors of Clairvest
company of Rivers Des Plaines to acquire appr
Group Inc. ("Clairvest") and members of High Plaines Gaming, LLC ("High Plaines"), an affff iff liate of RusRR h Street Gaming, LLC
and Casino Investors, LLC ("Casino Investors") forff
oximately $406.6 million and $3.5 million of
certain transaction costs and working capia tal adjustments (the "Sale Transaction"). Following the closing of the Sale
Transaction, the parties completed a recapia talization transaction on March 6, 2019 (the "Recapia talization"), pursuant to which
Midwest Gaming used appr
oximately $300.0 million in proceeds frff om amended and extended credit faff cilities to redeem, on a
pro rata basis, additional Midwest Gaming units held by High Plaines and Casino Investors. As a result of the Recapia talization,
the Company's ownership of Midwest Gaming increased to 61.3%. High Plaines retained ownership of 36.0% of Midwest
Gaming and Casino Investors retained ownership of 2.7% of Midwest Gaming.

cash consideration of appr

We also recognized a $103.2 million defeff rred tax liabia lity and a corresponding increase in our investment in unconsolidated
affff iff liates related to an entity we acquired in conjunction with our acquisition of the Clairvest ownership stake in Midwest
Gaming.

A new limited liabia lity company agreement was entered into by the members of Midwest Gaming as a result of the change in
ownership strucrr
turtt e. Under the new limited liabia lity company agreement, both the Company and High Plaines have
participating rights over Midwest Gaming, and both must consent to Midwest Gaming's operating, investing and fiff nancing
decisions. As a result, we account forff Midwest Gaming using the equity method.

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Thhe Compa yny’s iinvestment iin Miiddwest Gamii gng iis presentedd at our ii initiiall cost of iinvestment
pproportiionall shhare of iincome or lloss, iincll diudi gng ddepreciiatii
contriibbutiion, lless a yny didistriibbutiions iit hhas receiivedd. F lolllowii gng thhe Salle Transactiion a dnd Reca ipia talliizatiion, thhe carryiyirr
thhe Compa yny’s iinvestment iin Miiddwest Gamii gng was $$835.0 miilllliion hihighegher thhan thhe Compa yny’s
assets
ii dndefiiff
accretedd iinto iincome over a weiightghtedd averagge usef lulff
ddepreciiatedd over a weiightghtedd averagge useff lulfff
bebetween thhe Compa yny’s iinvestment iin Miiddwest Gamii gng a dnd thhe amounts
$835.0 million.

lplus thhe Compa yny's accum lulatedd
/on/accretiion of thhe didiffff eff rence iin thhe hihistoriicall bbasiis of thhe Compa yny’s
gng vallue of
iquityy iin thhe net
goodwiillll a dnd
)9.5) miilllliion rellatedd to b ibuilldidi gngs thhat wiillll bbe
lliifeff of 35.3 yyears, a dnd $$4.5 miilllliion rellatedd to personall propertyy thhat wiillll bbe
fof December 31, 2022, thhe net aggggreggate bbasiis didifffffff eff rence
iquityy iin net assets was

iquityy meth dhod bbasiis didifffffff eff rence was compriisedd fof $$853.7 miilllliion rellatedd to goodw
13.7) miilllliion rellatedd to non-ddepreciiablbla e lla dnd, $($(

fof Miiddwest Gamii gng. Thihis e
inite-lliivedd iintangingiblble assets, $($(

fof 3.7 yyears. As

dunderllyiyi gng e

fof thhe

lliiffeff

)

Our investment in Rivers Des Plaines was $544.9 million as of December 31, 2022 and $554.8 million as of December 31,
2021. The Company received distributions frff om Rivers Des Plaines of $123.8 million in 2022, $67.2 million in 2021 and
$10.7 million in 2020.

MiMM ami

i ValVV lll ell ye GamGG inii g

Delaware North Companies Gaming & Entertainment Inc. ("DNC") owns the remaining 50% interest in MVG. Since both we
and DNC have participating rights over MVG, and both must consent to MVG's operating, investing and fiff nancing decisions,
we account forff MVG using the equity method.

Our investment in MVG was $114.4 million as of December 31, 2022 and $108.7 million as of December 31, 2021. The
Company received distributions frff om MVG of $33.0 million in 2022, $42.0 million in 2021 and $20.0 million in 2020.

Summarizii ed FiFF nii anciali Resultll stt forff

our UnUU consolill datett d AfA fff iff lii ill ati ett s

2022 and 2021 and summarized balance sheet inforff mation as of December 31, 2022 and 2021 includes the folff

our unconsolidated affff iff liates are summarized below. The summarized income statement inforff mation
lowing equity

The fiff nancial results forff
forff
investments: MVG, Rivers Des Plaines, and other immaterial joint venturt es.

(i(( n millions)s

Assets

Current assets

Property and equipment, net

Other assets, net

Total assets

Liabilities and Members' Defiff cit

Current liabia lities
Long-term debt
Other liabia lities

Members' defiff cit

Total liabia lities and members' defiff cit

(i(( n millions)s

Net revenue

Operating and SG&A expense

Depreciation and amortization

Operating income

Interest and other expense, net

Net income

December 31,

2022

2021

91.0

345.7

265.0

701.7

97.9
838.6

0.2

(235.0)

701.7

Years Ended December 31,

2022

2021

2020

825.5

740.0

509.1

25.8
290.6
(24.8)
265.8

434.2

17.6
288.2
(38.6)
249.6

96.0

312.3

264.1

672.4

95.3
786.9

20.6

(230.4)

672.4

386.3

252.1

17.0
117.2
(63.1)
54.1

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

16. LEASES

Our operating leases with terms greater than one year are primarily related to buildings and land. Our operating leases with
terms less than one year are primarily related to equipment. Most of our building and land leases have terms of 2 to 10 years
and include one or more options to renew, with renewal terms that can extend the lease term frff om 1 to 5 years or more. Certain
of our lease agreements include lease payments based on a percentage of net gaming revenue and others include rental payment
each of our leases is determined based on adjustments
adjustments periodically forff
made to our secured debt borrowing rate.

inflff ation. The estimated discount rate forff

The components of total lease cost were as folff

lows:

(i(( n millions)s
Short-term lease cost (a) (b)
Operating lease cost (b)
Finance lease interest expense
Finance lease amortization expense (b)
Total lease cost

(a) Includes leases with terms of one year or less.
(b) Includes variabla e lease costs, which were not material.

Supplemental cash flff ow inforff mation related to leases are as folff

lows:

(i(( n millions)s

Cash paid forff

amounts included in the measurement of lease liabilities

Operating cash flff ows frff om operating leases

Operating cash flff ows frff om fiff nance leases

Financing cash flff ows frff om fiff nance leases

ROUAs obtained in exchange forff

lease obligations

Operating leases

Finance leases

Other inforff mation related to operating leases was as folff

lows:

Weighted Average Remaining Lease Term
Operating leases

Finance leases

Weighted Average Discount Rate

Operating leases

Finance leases

Years Ended December 31,
2021
2022

12.5 $
8.1
0.4
0.7
21.7 $

Years Ended December 31,
2021
2022

6.5 $

0.5 $

0.4 $

10.7 $

6.2 $

11.1
7.8
0.3
0.5
19.7

6.5

0.3

0.2

9.8

4.4

December 31,

2022

2021

6.5 years

14.9 years

5.9 years

16.0 years

4.1%

3.5%

3.3%

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

As of December 31, 2022, the futff urt e undiscounted cash flff ows associated with the Company's operating and fiff nancing lease
liabia lities were as folff

lows:

(i(( n millions)s

Years Ended December 31,

Operating Leases

Finance Leases

2023
2024
2025
2026
2027
Thereaftff er

Total futff urtt e minimum lease payments

Less: Imputed interest

Present value of lease liabia lities

Reported lease liabia lities as of December 31, 2022

Accruerr d expense and other current liabia lities (current maturt
leases)

ities of

Other liabia lities (non-current maturt

ities of leases)

Present value of lease liabia lities

17. BOARD OF DIRECTOR AND EMPLOYEE BENEFIT PLANS

Board of Dirii ectortt

srr and OfO fff iff cersrr Retitt rii ement PlPP anll

7.6 $
7.1
6.6
6.2
3.0
7.0
37.5
4.5
33.0 $

7.0 $

26.0

33.0 $

1.3
1.4
1.4
1.4
1.4
15.0
21.9
5.8
16.1

0.9

15.2

16.1

Under the 2005 Defeff rred Compensation Plan (the "Defeff rred Plan"), members of our Board of Directors may elect to invest the
defeff rred director feff e compensation into our common stock within the Defeff rred Plan.
Investments in our common stock are
credited as hypothetical shares of common stock based on the market price of the stock at the time the compensation was
earned. Upon the end of the director's service, common stock shares are issued to the director.

Prior to December 13, 2019, we provided eligible executives the opportuni
ty to defeff r the receipt of base and bonus
compensation to a futff urt e date and included a Company matching contribution on base compensation with certain limits through
eligible
the Defeff rred Plan. On December 13, 2019, the Compensation Committee elected to frff eeze the Defeff rred Plan forff
executives aftff er the 2019 plan year.

On December 13, 2019, the Compensation Committee adopted the Churchill Downs Incorpor
ated Restricted Stock Unit
Defeff rral Plan, effff eff ctive Januaryrr 1, 2020 (the "RSU Defeff rral Plan"). Under the RSU Defeff rral Plan, certain individual employees
who are management or highly compensated employees of the Company may elect to defeff r settlement of RSUs granted
pursuant to the 2016 Plan.

Othtt er Retitt rii ement PlPP anll

We have a profiff t-sharing plan foff r all employees with three months or more of service who are not otherwise participating in an
associated profiff t-sharing plan. We match contributions made by employees up to 3% of the employee’s annual compensation
and match at 50% any contributions made by the employee up to an additional 2% of compensation with certain limits. We
may also contribute a discretionaryrr amount determined annually by the Board of Directors as well as a year-end discretionaryrr
match not to exceed 4% of compensation. Our cash contribution to the plan was $4.3 million in 2022, $4.1 million in 2021, and
$3.7 million in 2020.
18. FAIR VALUE OF ASSETS AND LIABILITIES

We endeavor to utilize the best availabla e inforff mation in measuring faff ir value. Financial assets and liabia lities are classififf ed
based on the lowest level of input that is signififf cant to the faff ir value measurement.

lowing methods and assumptions are used to estimate the faff ir value of each class of fiff nancial instrumrr

ents forff which it is

The folff
practicabla e to estimate:

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Restrtt ictett d CasCC h

Our restricted cash accounts that are held in interest-bearing accounts qualifyff
identical assets.
includes unadjusted quoted market prices in active markets forff

forff Level 1 in the faff ir value hierarchy, which

Debt

The faff ir value of the Company's Senior Secured Term Loan B, Term Loan B-1, Term Loan A and Revolver under the Credit
Agreement appr
oximate the gross carryirr ng value of the variabla e rate debt and as such are Level 2 measurements. The faff ir value
of the Company’s 2030 Senior Notes, 2028 Senior Notes and 2027 Senior Notes are estimated based on unadjusted quoted
prices forff

identical or similar liabia lities in markets that are not active and as such are Level 2 measurements.

The carryirr ng amounts and estimated faff ir values by input level of the Company's fiff nancial instrumrr

ents are as folff

lows:

(i(( n millions)s
Financial assets:
Restricted cash

Financial liabia lities:

Term Loan B

Term Loan B-1
Term Loan A

Revolver

2027 Senior Notes

2028 Senior Notes

2030 Senior Notes

(i(( n millions)s
Financial assets:

Restricted cash

Financial liabia lities:

Term Loan B

Term Loan B-1

2027 Senior Notes
2028 Senior Notes

19. CONTINGENCIES

December 31, 2022

Carrying
Amount

Fair Value

Level 1

Level 2

Level 3

74.9

378.4

291.6
794.5

664.1

595.3

698.4

74.9

380.0

294.8
800.0

664.1

574.5

626.5

1,183.4

1,079.4

74.9

— $

380.0

—
—

—

294.8
800.0

664.1

574.5

626.5

1,079.4

December 31, 2021

Carrying
Amount

Fair Value

Level 1

Level 2

Level 3

64.3

381.6

294.0

594.3
698.1

64.3

384.0

297.8

619.5
724.5

64.3

— $

384.0

—

—
—

297.8

619.5
724.5

—

—
—

—

—
—

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

We are involved in litigation arising in the ordinaryrr
compensation claims frff om our employees and general liabia lity forff
We are self-ff insured up to an aggregate stop loss forff

course of conducting business. We carryrr

insurance forff workers'
claims frff om independent contractors, customers and guests.

our general liabia lity and workers' compensation coverages.

l and disclosure decisions. For certain legal proceedings, we
We review all litigation on an ongoing basis when making accruarr
cannot reasonabla y estimate losses or a range of loss, if any, particularly forff
proceedings that are in the early stages of
development or where the plaintiffff sff seek indeterminate damages. Various faff ctors, including but not limited to, the outcome of
l questions, may need to be determined beforff e probabia lity
potentially lengthy discoveryrr and the resolution of important faff ctuatt
can be establa ished or beforff e a loss or range of loss can be reasonabla y estimated.
In accordance with current accounting
litigation when it
standards forff
is probabla e that a loss associated with a claim or proceeding has been incurred and the amount of the loss or range of loss can
be reasonabla y estimated. When no amount within the range of loss is a better estimate than any other amount, we accruerr
the
minimum amount of the estimabla e loss. To the extent that such litigation against us may have an exposure to a loss in excess of

loss contingencies and based upon inforff mation currently known to us, we establa ish reserves forff

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

the amount we have accruerr d, we believe that such excess would not be material to our consolidated fiff nancial condition, results
of operations, or cash flff ows. Legal feff es are expensed as incurred.

If the loss contingency in question is not both probabla e and reasonabla y estimabla e, we do not establa ish an accruarr
will continue to be monitored forff
estimabla e.
assurance that any resulting liabia lity or fiff nancial commitment would not have a material adverse impact on our business.

l and the matter
any developments that would make the loss contingency both probabla e and reasonabla y
In the event that a legal proceeding results in a substantial judgment against, or settlement by us, there can be no

20. NET INCOME (LOSS) PER COMMON SHARE COMPUTATIONS

The folff

lowing is a reconciliation of the numerator and denominator of the net income (loss) per common share computations:

(i(( n millions, exee cepte

per share data)

Numerator forff

basic net income (loss) per common share:

Net income frff om continuing operations
Net loss attributabla e to noncontrolling interest
Net income frff om continuing operations, net of loss attributabla e
to noncontrolling interests
Net loss frff om discontinued operations

Numerator forff

basic net income (loss) per common share

Numerator forff
per common share

diluted net income frff om continuing operations

Numerator forff

diluted net income (loss) per common share

Denominator forff

net income (loss) per common share:

Basic

Plus dilutive effff eff ct of stock awards

Diluted

Net income (loss) per common share data:

Basic

Continuing operations

Discontinued operations

Net income (loss) per common share - basic

Diluted

Continuing operations
Discontinued operations (1)

Net income (loss) per common share - diluted

Years Ended December 31,
2021

2022

2020

439.4
—

439.4

37.9

0.6

38.5

11.58

—

11.58

11.42

—
11.42

249.1
—

249.1

38.6

0.6

39.2

6.45

—

6.45

6.35

—
6.35

13.3
(0.2)

13.5
(95.4)

(81.9)

13.5

(81.9)

39.6

0.5

40.1

0.34

(2.41)

(2.07)

0.33

(2.41)
(2.08)

(1) Amounts exclude all potential common equivalent shares forff

periods when there is a net loss frff om discontinued operations.

21. SEGMENT INFORMATION

We manage our operations through three reportabla e segments: Live and Historical Racing, TwinSpires, and Gaming. Refeff r to
Note 1, Description of Business, forff
additional inforff mation regarding the changes we made to our segments during the fiff rst
quarters of 2021 and 2022. Prior year amounts have been reclassififf ed to conforff m to this presentation. Our operating segments
reflff ect the internal management reporting used by our chief operating decision maker to evaluate results of operations and to
assess perforff mance and allocate resources.

•

Live and HiHH sii tortt

ical Racinii g

The Live and Historical Racing segment includes live and historical pari-mutuet
at Churchill Downs Racetrack and our historical racing properties in Kentuct ky, Virginia, and New Hampshire.

l racing related revenue and expenses

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Our Live and Historical Racing properties earn commissions primarily frff om pari-mutuett
l wagering on live and
historical races; simulcast feff es earned frff om other wagering sites, feff es frff om racing event-related services including
admissions, personal seat licenses, sponsorships, television rights, and other miscellaneous services, and revenue frff om
ff
food

and beverage services.

••

TwTT inii SpiSS rii es

The TwinSpires segment includes the revenue and expenses forff
Casino and United Tote businesses and these businesses are headquartered in Louisville, Kentuct ky.

TwinSpires Horse Racing, TwinSpires Sports and

TwinSpires Horse Racing operates the online horse racing wagering business forff TwinSpires.com, BetAmerica.com,
l platforff ms; faff cilitates high dollar wagering by international customers; and provides the
and other white-labea
horse racing statistical data.
Bloodstock Research Inforff mation Services platforff m forff

Our sports betting and casino business includes the retail and online TwinSpires sports betting and online casiino
ggamii gng operations.

Our TwinSpires Sports and Casino business includes the results of our nine retail sportsbooks at our wholly-owned
gaming properties and our casino platforff m in Pennsylvania. Rivers Des Plaines retail and online BetRivers sportsbook
is included in the Gaming segment.

The Company exited the direct online Sports and Casino business during 2022 in everyrr
Arizona.

state except Pennsylvania and

United Tote manufaff cturtt es and operates pari-mutuett
l
racetracks, OTBs and other pari-mutuet
wagering businesses. United Tote provides totalisator services which accumulate wagers, calculate payoffff sff and
displays wagering data to patrons who wager on horse races. United Tote has contracts to provide totalisator services
to third-party racetracks, OTBs and other pari-mutuet
l wagering businesses and also provides these services at our
faff cilities.

l wagering systems forff

•

GamGG inii g

The Gaming segment includes revenue and expenses forff
support the casino license as appl
lotteryrr

terminals ("VLTs") and 358 tabla e games located in ten states.

icabla e. The Gaming segment has appr

the casino properties and associated racetrack faff cilities which
oximately 13,980 slot machines and video

The Gaming segment revenue and expenses includes the folff

lowing properties:

◦ Florida - Calder Casino ("Calder")
◦
◦ Louisiana - Fair Grounds Slots, Fair Grounds Race Course, and Video Services, LLC ("VSI") (collectively,

Iowa - Hard Rock Hotel & Casino ("Hard Rock Sioux City")

"Fair Grounds and VSI")

◦ Marylrr and - Ocean Downs Casino & Racetrack ("Ocean Downs")
◦ Maine - Oxforff d Casino & Hotel ("Oxforff d")
◦ Mississippi

▪ Harlow’s Casino Resort and Spa ("Harlow's")
▪ Riverwalk Casino Hotel ("Riverwalk")

◦ New York - del Lago Resort & Casino ("del Lago")
◦ Pennsylvania

▪ Presque Isle Downs & Casino ("Presque Isle")
▪ Lady Luck Casino Nemacolin ("Lady Luck Nemacolin") management agreement

The Gaming segment also includes net income forff
folff

lowing:

our ownership portion of the Company’s equity investments in the

◦
◦

Illinois - 61.3% equity investment in Midwest Gaming, the parent company of Rivers Des Plaines
Ohio - 50% equity investment in MVG

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

The Gaming segment includes revenue and expenses forff
the casino properties and associated racetracks which support
the casino license. The Gaming segment generates revenue and expenses frff om slot machines, tabla e games, VLTs,
video poker, HRMs, ancillaryrr
l wagering, racing
event-related services, and other miscellaneous operations.

and beverage services, hotel services, commission on pari-mutuet

ff
food

We have aggregated Arlington as well as certain corpor
reconcile to consolidated results.

ate operations, and other immaterial joint venturt es in All Other to

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

Eliminations include the elimination of intersegment transactions. We utilize non-GAAP measures, including EBITDA
(earnings beforff e interest, taxes, depreciation and amortization) and Adjusted EBITDA. Our chief operating decision maker
utilizes Adjusted EBITDA to evaluate segment perforff mance, develop strategy and allocate resources. Adjusted EBITDA
includes the folff

lowing adjustments:

Adjusted EBITDA includes our portion of EBITDA frff om our equity investments.

Adjusted EBITDA excludes:

•

Transaction expense, net which includes:

– Acquisition, disposition, and land sale related charges;

– Direct online Sports and Casino business exit costs; and

– Other transaction expense, including legal, accounting, and other deal-related expense;

Stock-based compensation expense;

Rivers Des Plaines' impact on our investments in unconsolidated affff iff liates frff om:

–

The impact of changes in faff ir value of interest rate swapsa

; and

Legal reserves and transaction costs;

Asset impairments;

Gain on Calder Land sale;

Legal reserves;

Pre-opening expense; and

Other charges, recoveries, and expenses

•

ryrr 15, 2023, the Company closed on
As of December 31, 2021, Arlington ceased racing and simulcast operations. On Februarr
the sale of the property to the Chicago Bears. Refeff r to Note 4, Dispositions and Assets Held forff
additional
inforff mation. Arlington's operating loss in the current quarter and year is treated as an adjustment to EBITDA and is included in
Other expenses, net in the Reconciliation of Comprehensive Income to Adjusted EBITDA.

Sale forff

We utilize the Adjusted EBITDA metric to provide a more accurate measure of our core operating results and enabla e
management and investors to evaluate and compare frff om period to period our operating perforff mance in a meaningfulff
and
consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of
perforff mance, as an alternative to cash flff ows frff om operating activities as a measure of liquidity, or as an alternative to any other
measure provided in accordance with GAAP. Our calculation of Adjusted EBITDA may be diffff eff rent frff om the calculation used
by other companies and, thereforff e, comparabia lity may be limited. For segment reporting, Adjusted EBITDA includes
intercompany revenue and expense totals that are eliminated in the accompanying Consolidated Statements of Comprehensive
Income (Loss).

The tabla es below present net revenue frff om external customers and intercompany revenue frff om each of our segments, Adjusted
EBITDA by segment and reconciles comprehensive income to Adjusted EBITDA:

Net revenue by segment is comprised of the folff

lowing:

(i(( n millions)s
Live and Historical Racing

TwinSpires

Gaming

All Other
Net Revenue

Years Ended December 31,
2021

2020

2022

614.6

409.1

436.4

755.9

2.9

451.4

695.4

41.3

169.6

430.1

435.3

19.0

1,809.8

1,597.2

1,054.0

Adjusted EBITDA by segment is comprised of the folff

lowing:

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

(i(( n millions)s

Revenue

Taxes and purses
Marketing and advertising
Salaries and benefiff ts
Content expense
Selling, general and administrative expense

Other operating expense
Other income

Adjusted EBITDA

(i(( n millions)s

Revenue

Taxes and purses

Marketing and advertising

Salaries and benefiff ts

Content expense

Selling, general and administrative expense

Other operating expense

Other income

Adjusted EBITDA

(i(( n millions)s

Revenue

Taxes and purses
Marketing and advertising

Salaries and benefiff ts
Content expense

Selling, general and administrative expense

Other operating expense
Other income

Adjusted EBITDA

Year Ended December 31, 2022

Live and
Historical Racing

TwinSpires

Gaming

646.4

441.6

(168.6)
(19.8)
(63.4)
(3.4)
(18.6)

(85.5)
0.4

(27.0)
(13.0)
(26.8)
(203.3)
(9.7)

(47.8)
0.1

287.5

114.1

761.8

(278.1)
(18.9)
(102.7)
(8.3)
(31.3)

(91.5)
190.9

421.9

Year Ended December 31, 2021

Live and
Historical Racing

TwinSpires

Gaming

430.6

457.8

(126.3)

(12.9)

(48.4)

(2.5)

(12.8)

(53.0)

0.3

(30.7)

(49.4)

(27.0)

(206.6)

(11.0)

(50.4)

—

175.0

82.7

698.4

(264.4)

(11.8)

(87.1)

(4.7)

(27.9)

(72.3)

181.7

411.9

Year Ended December 31, 2020

Live and
Historical Racing

TwinSpires

Gaming

188.8

435.6

(64.1)

(6.2)

(32.5)
(1.5)

(8.7)

(36.8)
0.1

(25.1)

(16.5)

(24.6)
(202.7)

(10.4)

(40.5)
0.1

39.1

115.9

437.8

(171.6)

(7.5)

(75.9)
(3.5)

(25.4)

(59.7)
78.9

173.1

F
F
o
o
r
r
m
m
1
1
0
0
-
-
K
K

Years Ended December 31,
2021

2022

2020

439.4
—
439.4
—
439.4

113.7
147.3
169.4

249.1
—
249.1
—
249.1

103.2
84.7
94.5

(81.9)
0.2
(82.1)
95.4
13.3

92.9
80.0
(5.3)

869.8

531.5

180.9

31.8

27.8

3.8

7.4

13.2

42.8

(12.6)

0.6

1.0

(274.6)

42.1

38.3

(106.2)

—

0.2

5.8

41.5

(12.9)

9.9

—

7.9

15.3

95.5

763.6

627.0

287.5

175.0

114.1

421.9

823.5

(59.9)

82.7

411.9

669.6

(42.6)

763.6

627.0

23.7

—

0.8

11.2

38.5

12.9

—

1.0

17.5

105.6

286.5

39.1

115.9

173.1

328.1

(41.6)

286.5

Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

(i(( n millions)s
Reconciliation of Comprehensive Income (Loss) to Adjd usted EBITDA:

Net income (loss) and comprehensive income (loss) attributable to
Churchill Downs Incorporated

Net loss attributabla e to noncontrolling interest
Net income (loss)
Loss frff om discontinued operations, net of tax

Income frff om continuing operations, net of tax

Additions:

Depreciation and amortization
Interest expense
Income tax provision (benefiff t)

EBITDA

Adjustments to EBITDA:

Selling, general and administrative:

Stock-based compensation expense

Legal reserves

Other charges

Pre-opening expense and other expense

Other income, expense:

Interest, depreciation and amortization expense related to equity
investments
Changes in faff ir value of Rivers Des Plaines' interest rate swapsa

Rivers Des Plaines' legal reserves and transactions costs

Other charges and recoveries, net

Gain on Calder land sale
Transaction expense, net

Asset impairments

Total adjustments to EBITDA

Adjd usted EBITDA

Adjd usted EBITDA by segment:

Live and Historical Racing

TwinSpires
Gaming

Total segment Adjusted EBITDA

All Other

Total Adjd usted EBITDA

Churchill Downs Incorpor

ated

The tabla e below presents total asset inforff mation forff

each of our segments:

Notes to Consolidated Financial Statements

(i(( n millions)s
Total assets:

Live and Historical Racing
TwinSpires
Gaming

Total segment assets

All Other

The tabla e below presents total capia tal expenditurt es forff

each of our segments:

(i(( n millions)s

Capital expenditures:

Live and Historical Racing

TwinSpires

Gaming

Total segment capia tal expenditurt es

All Other

Total capital expenditures

22. RELATED PARTY TRARR NSACTIONS

December 31,

2022

2021

3,345.4
287.9
1,824.2
5,457.5
749.3
6,206.8

682.7
289.6
1,003.3
1,975.6
1,006.0
2,981.6

Years Ended December 31,
2021

2022

2020

307.0

87.6

11.8

406.4

17.1

60.1

18.6

10.3

89.0

2.8

423.5

91.8

213.3

6.7

11.6

231.6

2.6

234.2

Directors and employees may frff om time to time own or have interests in horses racing at our racetracks. All such races are
icabla e, and no director or employee
conducted under the regulations of each state’s respective regulatoryrr
receives any extra or special benefiff t with regard to having his or her horses selected to runrr
in races or in connection with the
actuatt
ng of races. There is no material fiff nancial statement impact attributabla e to directors or employees who may have
interests in horses racing at our racetracks.

agency, as appl

l runni

In the ordinaryrr course of business, we may enter into transactions with certain of our offff iff cers and directors forff
personal seat licenses, suite accommodations, and tickets forff
been on terms no less faff vorabla e forff
director received any extra or special benefiff t in connection with such transactions.

the sale of
our live racing events. We believe that each such transaction has
us than could have been obtained in a transaction with a third party, and no offff iff cer or

StSS octt k Repuee

rchase Agreement

On Februarr
repurchase 1,000,000 shares of the Company’s common stock forff
aggregate purchase price was $193.9 million. The Stock Repurchase Agreement contains customaryrr
and covenants of the parties.

ryrr 1, 2021, the Company entered into an agreement (the "Stock Repurchase Agreement") with an affff iff liate of TDG to
$193.94 per share in a privately negotiated transaction. The
representations, warranties

The repurchase of shares of common stock frff om TDG pursuant to the Stock Repurchase Agreement was appr
oved by the
Company's Board of Directors separately frff om, and did not reduce the authorized amount remaining under, the existing
common stock repurchase program frff om October 2018. The Company repurchased the shares using availabla e cash and
borrowings under the Revolver.

Amendment tott CrCC editii Agreement

ryrr 1, 2021, the Company entered into an amendment to the Credit Agreement to increase the amount of certain
Also, on Februarr
otherwise restricted payments permitted during the Financial Covenant Relief Period frff om $26.0 million to $226.0 million to
.
accommodate the repurchase of shares of common stock frff om TDG described above

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Churchill Downs Incorpor

ated

Notes to Consolidated Financial Statements

23. SUBSEQUENT EVENTS

On Februarr
$197.2 million per the agreement announced in September 2021.

ryrr 15, 2023, we closed on the sale of 326-acres of property in Arlington Heights, Illinois, to the Chicago Bears forff

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Churchill Downs Incorpor

ated

OpiOO nii ions on thtt e FiFF nii anciali StSS attt ett mentstt and InII tett rnrr al ConCC trtt ol over FiFF nii anciali Repor

titt nii g

We have audited the accompanying consolidated balance sheets of Churchill Downs Incorpor
“Company”) as of December 31, 2022 and 2021, and the related consolidated statements of comprehensive income (loss), of
shareholders' equity and of cash flff ows forff
related notes and schedule of valuation and qualifyiff ng accounts forff
2022 appe
a
the Company's internal control over fiff nancial reporting as of December 31, 2022, based on criteria establa ished in IntII ernal
ContCC rtt ol - IntII egre ated FrFF ameworkrr (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).

aring under Item 15(a)(2) (collectively refeff rred to as the “consolidated fiff nancial statements”). We also have audited

each of the three years in the period ended December 31, 2022, including the

each of the three years in the period ended December 31,

ated and its subsidiaries (the

present faff irly, in all material respects, the fiff nancial
In our opinion, the consolidated fiff nancial statements refeff rred to above
each of
position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flff ows forff
the three years in the period ended December 31, 2022 in conforff mity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effff eff ctive internal control
over fiff nancial reporting as of December 31, 2022, based on criteria establa ished in IntII ernal ContCC rtt ol - IntII egre ated FrFF ameworkrr
(2013) issued by the COSO.

Basisii forff OpiOO nii ions

these consolidated fiff nancial statements, forff maintaining effff eff ctive internal

its assessment of the effff eff ctiveness of internal control over fiff nancial reporting,

The Company's management is responsible forff
control over fiff nancial reporting, and forff
included in Management’s Report on Internal Control over Financial Reporting appe
is to express opinions on the Company’s consolidated fiff nancial statements and on the Company's internal control over
fiff nancial reporting based on our audits. We are a public accounting fiff rm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. feff deral securities laws and the appl
the PCAOB.

icabla e rulrr es and regulations of the Securities and Exchange Commission and

aring under Item 9A. Our responsibility

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perforff m
the audits to obtain reasonabla e assurance about
misstatement, whether due to error or frff aud, and whether effff eff ctive internal control over fiff nancial reporting was maintained in
all material respects.

whether the consolidated fiff nancial statements are frff ee of material

Our audits of the consolidated fiff nancial statements included perforff ming procedures to assess the risks of material
misstatement of the consolidated fiff nancial statements, whether due to error or frff aud, and perforff ming procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated fiff nancial statements. Our audits also included evaluating the accounting principles used and signififf cant
estimates made by management, as well as evaluating the overall presentation of the consolidated fiff nancial statements. Our
audit of internal control over fiff nancial reporting included obtaining an understanding of internal control over fiff nancial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effff eff ctiveness
of internal control based on the assessed risk. Our audits also included perforff ming such other procedures as we considered
necessaryrr

in the circumstances. We believe that our audits provide a reasonabla e basis forff

our opinions.

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As described in Management’s Report on Internal Control over Financial Reporting, management has excluded the properties
acquired as part of the Peninsula Pacififf c Entertainment LLC (“P2E) acquisition and Ellis Park Racing & Gaming (“Ellis
Park) frff om its assessment of internal control over fiff nancial reporting as of December 31, 2022, because they were acquired
by the Company in purchase business combinations during 2022. We have also excluded the properties acquired as part of the
P2E acquisition and Ellis Park frff om our audit of internal control over fiff nancial reporting. The properties acquired as part of
the P2E acquisition and Ellis Park are wholly-owned subsidiaries whose total assets and total revenues excluded frff om
management’s assessment and our audit of internal control over fiff nancial reporting represent appr
than 1% of total assets, respectively and appr
consolidated fiff nancial statement amounts as of and forff

oximately 11.3% and less
oximately 6.1% and less than 1% of total revenues, respectively, of the related

the year ended December 31, 2022.

Defe iff nii itii itt on and Limii

itii attt

itt ons of InII tett rnal ConCC trtt ol over FiFF nii anciali Repor

titt nii g

A company’s internal control over fiff nancial reporting is a process designed to provide reasonabla e assurance regarding the
reliabia lity of fiff nancial reporting and the preparation of fiff nancial statements forff
es in accordance with generally
accepted accounting principles. A company’s internal control over fiff nancial reporting includes those policies and procedures

external purpos

that (i) pertain to the maintenance of records that, in reasonabla e detail, accurately and faff irly reflff ect the transactions and
dispositions of the assets of the company; (ii) provide reasonabla e assurance that transactions are recorded as necessaryrr
permit preparation of fiff nancial statements in accordance with generally accepted accounting principles, and that receipts and
expenditurt es of the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonabla e assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effff eff ct on the fiff nancial statements.

Because of its inherent limitations, internal control over fiff nancial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effff eff ctiveness to futff urt e periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

CrCC itii itt cal Auditii MatMM ttt ett rsrr

The critical audit matter communicated below is a matter arising frff om the current period audit of the consolidated fiff nancial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated fiff nancial statements and (ii) involved our especially challenging, subjective,
or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
fiff nancial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Acquisii ition of Peninsula Pacifi iff c EntEE ertainment LLC – ValVV uation of Inde

fe iff nite-Lived Gaming Right

stt IntII angible Assetstt

As described in Notes 1 and 3 to the consolidated fiff nancial statements, on November 1, 2022, the Company completed the
acquisition of substantially all of the assets of Peninsula Pacififf c Entertainment LLC (“P2E”) forff
consideration of $2.835.9 million, net of cash acquired, which resulted in $1,865.6 million of indefiff nite-lived gaming rights
intangible assets being recorded. The faff ir value of the gaming rights was determined using the Greenfiff eld method, which is
an income appr
management makes signififf cant estimates and assumptions about
the discount rates.

oach methodology. In estimating the faff ir value of the indefiff nite-lived gaming rights intangible assets,

futff urtt e revenue and operating expenses, start-up costs, and

a preliminaryrr purchase

our determination that perforff ming procedures relating to the indefiff nite-lived gaming rights
The principal considerations forff
intangible assets acquired in the acquisition of P2E is a critical audit matter are (i) the signififf cant judgment by management
when developing the faff ir value estimate of the indefiff nite-lived gaming rights, (ii) a high degree of auditor judgment,
subjectivity, and effff orff
futff urtt e revenue and operating expenses, start-up costs, and discount rates; and (iii) the audit effff orff
profeff ssionals with specialized skill and knowledge.

ying procedures and evaluating management’s signififf cant assumptions related to estimated

t involved the use of

a
t in appl

opriateness of the
oach methodology, (iv) testing the completeness and accuracy of the data used in the methodology, and (v)

Addressing the matter involved perforff ming procedures and evaluating audit evidence in connection with forff ming our overall
opinion on the consolidated fiff nancial statements. These procedures included testing the effff eff ctiveness of controls relating to
the acquisition accounting, including controls over management’s valuation of the gaming rights intangible assets. These
procedures also included, among others, (i) reading the purchase agreement, (ii) testing management’s process forff
the faff ir value estimate of the indefiff nite-lived gaming rights intangible assets, (iii) evaluating the appr
income appr
evaluating the reasonabla eness of signififf cant assumptions related to the futff urtt e revenue and operating expenses, start-up costs,
and discount rates. Evaluating the reasonabla eness of the futff urt e revenue and operating expenses and start-up costs involved
considering the past perforff mance of P2E, economic and industryrr
evidence obtained in other areas of the audit. Profeff ssionals with specialized skill and knowledge were used to assist in the
evaluation of the appr
oach methodology and the reasonabla eness of the discount
a
rates assumption.

forff ecasts, and whether the assumptions were consistent with

opriateness of the Company's income appr

developing

/s/ PricewaterhouseCoopers LLP
Louisville, Kentuctt ky
Februarr

ryrr 22, 2023

We have served as the Company’s auditor since 1990.

ITEM 9.

None.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

ITEM 9A.

CONTROLS AND PROCEDURES

Evaluatitt on of Disii closll ure ConCC trtt olsll and PrPP ocedures

We maintain disclosure controls and procedures designed to ensure that inforff mation required to be disclosed in our reports
that we fiff led or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and
reported within the time periods specififf ed in the Securities and Exchange Commission rulrr es and forff ms, and that such
inforff mation is accumulated and communicated to our management, including our Chief Executive Offff iff cer and Chief
Financial Offff iff cer, as appr

opriate, to allow timely decisions regarding required disclosures.

As required by the Securities and Exchange Commission RulRR e 13a-15(e), we carried out an evaluation, under the supervision
and with the participation of management, including our Chief Executive Offff iff cer and Chief Financial Offff iff cer, of the
effff eff ctiveness of the design and operation of our disclosure controls and procedures as of December 31, 2022. Based upon the
forff egoing, our Chief Executive Offff iff cer and Chief Financial Offff iff cer concluded that our disclosure controls and procedures
were effff eff ctive.

ChCC anges inii

InII tett rnal ConCC trtt ol over FiFF nii anciali Repor

titt nii g

There has been no change in our internal controls over fiff nancial reporting during our most recent fiff scal quarter that has
materially affff eff cted, or is reasonabla y likely to materially affff eff ct, our internal control over fiff nancial reporting. Our process forff
evaluating controls and procedures is continuous and encompasses constant improvement of the design and effff eff ctiveness of
establa ished controls and procedures.

ManMM agement’s’ Repor

t on InII tett rnal ConCC trtt ol over FiFF nii anciali Repor

titt nii g

establa ishing and maintaining adequate internal control over fiff nancial reporting of Churchill
Management is responsible forff
ated, as defiff ned in RulRR es 13a-15(f)ff or 15d-15(f)ff under the Securities Exchange Act of 1934, as amended.
Downs Incorpor
Under the supervision and with the participation of our management, including our Chief Executive Offff iff cer and Chief
ated's internal control over
Financial Offff iff cer, we conducted an evaluation of the effff eff ctiveness of Churchill Downs Incorpor
fiff nancial reporting based upon the frff amework in the IntII egre ated ContCC rtt ol-IntII egre ated FrFF ameworkrr
issued by the
Committee of Sponsoring Organizations of the Treadway Commission.

((
(2013)

We have excluded the properties acquired as part of the Peninsula Pacififf c Entertainment LLC ("P2E") acquisition and Ellis
Park Racing & Gaming ("Ellis Park") frff om our assessment of internal control over fiff nancial reporting as of December 31,
2022, because these properties were acquired by us in business acquisitions during 2022. The total assets excluded were
oximately 6.1% and less than 1% of total revenues, respectively,
11.3% and less than 1% of total assets, respectively and appr
of the related consolidated fiff nancial statement amounts as of and forff

the year ended December 31, 2022.

Based upon our evaluation under the frff amework in the IntII ernal ContCC rtt ol-IntII egre ated FrFF ameworkrr
concluded that Churchill Downs Incorpor
2022.

management has
ated's internal control over fiff nancial reporting was effff eff ctive as of December 31,

((
(2013)

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/s/ William C. Carstanjen
William C. Carstanjen

Chief Executive Offff iff cer
ryrr 22, 2023
Februarr

/s/ Marcia A. Dall
Marcia A. Dall

Executive Vice President and
Chief Financial Offff iff cer

Februarr

ryrr 22, 2023

/s/ Jon E. Rauch
Jon E. Rauch

Vice President and
Chief Accounting Offff iff cer

Februarr

ryrr 22, 2023

The effff eff ctiveness of the Company's internal control over fiff nancial reporting as of December 31, 2022 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting fiff rm, as stated in their report which appe
ars
herein.

ITEM 9B.

OTHER INFORMATION

None.

Item 9C.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

a
Not appl

icabla e.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORARR TE GOVERNANCE

The inforff mation with respect to our directors and audit committee is incorpor
ated by refeff rence to the defiff nitive proxy
statement on Schedule 14A to be fiff led with the Securities and Exchange Commission no later than 120 days aftff er
December 31, 2022.

We have adopted a Code of Conduct that appl
Offff iff cer, Chief Financial Offff iff cer and principal fiff nancial offff iff cers. This Code of Conduct is availabla e on our corpor
www.churchilldownsincorpor
ated.com
availabla e to shareholders upon request.

ies to all directors, employees, and offff iff cers, including our Chief Executive
ate website,
ate Governance" subheading of the "Investors" heading and is also

, under the "Corpor

Inforff mation about our Executive Offff iff cers

Name

William C. Carstanjen

William E. Mudd

Marcia A. Dall

Bradley K. Blackwell

Maureen Adams

Age as of
2/22/2023

Principal Occupation forff

the Past Five Years

and Position with Churchill Downs Incorporated

Chief Executive Offff iff cer since August 2014; President and Chief Operating Offff iff cer
frff om March 2011 to August 2014.

President and Chief Operating Offff iff cer since October 2015; President and Chief
Financial Offff iff cer frff om August 2014 to October 2015; Executive Vice President
and Chief Financial Offff iff cer frff om October 2007 to August 2014.

Executive Vice President and Chief Financial Offff iff cer since October 2015;
Executive Vice President and Chief Financial Offff iff cer of Erie Insurance Group and
ation (Nasdaq: ERIE), frff om March 2009
Erie Indemnity Company, a public corpor
through October 2015.

Senior Vice President, General Counsel and Secretaryrr since March 2017; Vice
President, Operations frff om Februarr
frff om April 2011 to Februarr
forff TwinSpires frff om Januaryrr 2007 to May 2011; Corpor
2005 to December 2007.
Senior Vice President of Gaming Operations since Februarr
of Gaming Operations frff om July 2019 to Februarr
Manager of Calder Casino frff om August 2013 to July 2019.

ryrr 2015 to March 2017; Vice President, Legal
ryrr 2015; Vice President, Legal and Regulatoryrr Affff aff irs
rr

ryrr 2022; President and General

ate Counsel frff om April

ryrr 2022; Vice President

ITEM 11.

EXECUTIVE COMPENSATION

ated by refeff rence to the defiff nitive
The inforff mation required by this item with respect to executive compensation is incorpor
proxy statement on Schedule 14(a) to be fiff led with the Securities and Exchange Commission no later than 120 days aftff er
December 31, 2022; provided, that the Compensation Committee Report will not be deemed to be "fiff led" with this Report.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS

The inforff mation required by this item with respect to security ownership of certain benefiff cial owners and management and
related shareholder matters is with respect to securities authorized forff
ated
by refeff rence to the defiff nitive proxy statement on Schedule 14A to be fiff led with the Securities and Exchange Commission no
later than 120 days aftff er December 31, 2022.

issuance under equity compensation plans incorpor

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRARR NSACTIONS, AND DIRECTOR
INDEPENDENCE

The inforff mation required by this item with respect to transactions with related persons and director independence matters is
incorpor
ated by refeff rence to the defiff nitive proxy statement on Schedule 14A to be fiff led with the Securities and Exchange
rr
Commission no later than 120 days aftff er December 31, 2022.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVR ICES

ated by refeff rence to
The inforff mation required by this Item with respect to principal accounting feff es and services is incorpor
the defiff nitive proxy statement on Schedule 14A to be fiff led with the Securities and Exchange Commission no later than 120
days aftff er December 31, 2022.

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Pages

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULE

(a) (1) Consolidated Financial Statements

lowing fiff nancial statements of Churchill Downs Incorpor

The folff
2020 are included in Part II, Item 8:

ated forff

the years ended 2022, 2021 and

Consolidated Statements of Comprehensive Income

)
(Loss)
(

Consolidated Balance Sheets

y
Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

(
(PCAOB ID

238))

(2) Schedule II—Valuation and Qualifyiff ng Accounts

Q
All other schedules are omitted because they are not appl
the required inforff mation is included in the consolidated fiff nancial statements or notes thereto.

y g

icabla e, not signififf cant or not required, or because

(3) For the list of required exhibits, see exhibit index.

Exhibits

See exhibit index.

All fiff nancial statements and schedules except those items listed under Items 15(a)(1) and (2) above
omitted because they are not appl
the consolidated fiff nancial statements or notes thereto.

icabla e or not required, or because the required inforff mation is included in

are

(b)

(c)

Numbers

Descriptionp

By Refeff rence To

EXHIBIT INDEX

2.1

2.2

3.1

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

10.1

10.2

10.3

Purchase Agreement, dated as of Februarr
between Peninsula Pacififf c Entertainment Intermediate
Holdings LLC and Churchill Downs Incorpor

ated

ryrr 18, 2022, by and

Amendment No. 1 to Purchase Agreement, dated as of
September 2, 2022, by and between Peninsula Pacififf c
Entertainment Intermediate Holdings LLC and Churchill
Downs Incorpor

ation

Amended and Restated Articles of Incorpor
Churchill Downs Incorpor
rr
Januaryrr 25, 2019

ated, as amended and restated on

ation of

Exhibit 2.1 to Current Report on Form 8-K
fiff led Februarr

ryrr 22, 2022

Exhibit 2.1 to Current Report on Form 8-K
fiff led September 6, 2022

Exhibit 3.2 to Current Report on Form 8-K
fiff led Januaryrr 17, 2019

Amended and Restated Bylaws of Churchill Downs
ated, as amended October 25, 2022
rr
Incorpor

Exhibit 3.1 to Current Report on Form 8-K
fiff led October 25, 2022

Rights Agreement, dated as of March 19, 2008 by and
between Churchill Downs Incorpor
Bank [NC(1)]

ated and National City

Indenturt e, dated as of December 27, 2017, by and among
Churchill Downs Incorpor
and U.S. Bank National Association

ated, the guarantors party thereto

Indenturt e, dated as of March 25, 2019, by and among
Churchill Downs Incorpor
and U.S. Bank National Association

ated, the guarantors party thereto

Exhibit 4.1 to Current Report on Form 8-K
fiff led March 17, 2008

Exhibit 4.1 to Current Report on Form 8-K
fiff led December 27, 2017

Exhibit 4.1 to Current Report on Form 8-K
fiff led March 26, 2019

Second Supplemental Indenturt e, dated as of March 17,
2021, by and among Churchill Downs Incorpor
ated, the
guarantors party thereto and U.S. Bank National Association

Exhibit 4.1 to Current Report on Form 8-K
fiff led March 18, 2021

Indenturtt e, dated April 13, 2022, by and between CDI
Escrow Issuer, Inc. and U.S. Bank National Association as
trusrr

tee

Registration Rights Agreement, dated as of December 27,
2017, by and among Churchill Downs Incorpor
ated, the
guarantors party thereto and J.P. Morgan Securities LLC

Registration Rights Agreement, dated as of March 25, 2019,
by and among Churchill Downs Incorpor
ated, the guarantors
party thereto and J.P. Morgan Securities, LLC

Registration Rights Agreement, dated as of March 17, 2021,
by and among Churchill Downs Incorpor
ated, the guarantors
party thereto and J.P. Morgan Securities LLC

Exhibit 4.1 to Current Report on Form 8-K
fiff led April 14, 2022

Exhibit 4.2 to Current Report on Form 8-K
fiff led December 27, 2017

Exhibit 4.2 to Current Report on Form 8-K
fiff led March 26, 2019

Exhibit 4.2 to Current Report on Form 8-K
fiff led March 18, 2021

Registration Rights Agreement, dated April 13, 2022, by and
between CDI Escrow Issuer, Inc. and J.P. Morgan Securities
LLC, as representative of the initial purchasers

Exhibit 4.2 to Current Report on Form 8-K
fiff led April 14, 2022

Description of the Registrant’s Securities Registered
Pursuant to Section 12 of the Securities Exchange Act of
1934

Exhibit 4(f)ff to Annual Report on Form 10-K
forff
the fiff scal year ended December 31, 2020
fiff led Februarr

ryrr 24, 2021

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Churchill Downs Incorpor
Supplemental Benefiff t Plan effff eff ctive December 1, 1998†

ated Amended and Restated

Churchill Downs Incorpor
Defeff rred Compensation Plan forff Employees and Directors†

ated Amended and Restated

Exhibit 10(a) to Annual Report on Form 10-K
forff
the fiff scal year ended December 31, 1998
fiff led March 31, 1999

Exhibit 10(a) to Quarterly Report on Form
the fiff scal quarter ended March 31,
10-Q forff
2001 fiff led May 15, 2001

2005 Churchill Downs Incorpor
Plan†

ated Defeff rred Compensation

Exhibit 10.1 to Current Report on Form 8-K
fiff led June 21, 2005

Numbers

Descriptionp

By Refeff rence To

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

2006 Amendment to 2005 Churchill Downs Incorpor
Defeff rred Compensation Plan†

ated

Exhibit 10.1 to Current Report on Form 8-K
fiff led June 8, 2006

Amendment to Churchill Downs Incorpor
Defeff rred Compensation Plan Adopted June 28, 2007†

ated 2005

2005 Churchill Downs Incorpor
Plan (As Amended as of December 1, 2008)†

ated Defeff rred Compensation

Exhibit 10(b) to Quarterly Report on Form
10-Q forff
the fiff scal quarter ended June 30,
2007 fiff led August 7, 2007

Exhibit 10 (ww) to Annual Report on Form
10-K forff
the fiff scal year ended December 31,
2008 fiff led March 4, 2009

Third Amendment to the 2005 Churchill Downs
rr
Incorpor

ated Defeff rred Compensation Plan†

Exhibit 10.2 to Current Report on Form 8-K
fiff led December 19, 2019

Fourth Amendment to the 2005 Churchill Downs
Incorpor
ated Defeff rred Compensation Plan† **
rr
Fiftff h Amendment to the 2005 Churchill Downs Incorpor
Defeff rred Compensation Plan† **
Sixth Amendment to the 2005 Churchill Downs
Incorpor
ated Defeff rred Compensation Plan† **
rr
Churchill Downs Incorpor
Defeff rred Compensation Plan†

ated Restricted Stock Unit

ated

Exhibit 10.1 to Current Report on Form 8-K
fiff led December 19, 2019

Churchill Downs Incorpor
Incentive Plan†

ated 2007 Omnibus Stock

Exhibit A to Schedule 14A fiff led April 30,
2007

Amendment to the Churchill Downs Incorpor
Omnibus Stock Incentive Plan†

ated 2007

Amended and Restated Terms and Conditions of
Perforff mance Stock Awards Issued Pursuant to the Churchill
Downs Incorpor
dated as of December 19, 2008†

ated 2007 Omnibus Stock Incentive Plan,

Form of Churchill Downs Incorpor
Agreement pursuant to the 2007 Omnibus Stock Incentive
Plan†

ated Restricted Stock

Form of Restricted Stock Agreement pursuant to the 2007
Omnibus Stock Incentive Plan, dated as of Februarr
by and between Churchill Downs Incorpor
William C. Carstanjen and William E. Mudd†

ated and each of

ryrr 9, 2015,

Form of Churchill Downs Incorpor
Unit Agreement pursuant to the 2007 Omnibus Stock
Incentive Plan†

ated Perforff mance Share

Exhibit B to Schedule 14A fiff led May 3, 2012

Exhibit 10.1 to Current Report on Form 8-K
fiff led December 22, 2008

Exhibit 10(LL) to Annual Report on Form 10-
K forff
the fiff scal year ended December 31,
2011 fiff led March 12, 2012

Exhibit 10.1 to Current Report on Form 8-K
fiff led Februarr

ryrr 12, 2015

Exhibit 10.1B to Current Report on Form 8-
K fiff led September 28, 2015

Churchill Downs Incorpor
Incentive Plan†

ated 2016 Omnibus Stock

Exhibit 10.1 to Current Report on Form 8-K
fiff led April 29, 2016

Form of Perforff mance Share Unit Agreement pursuant to the
2016 Omnibus Stock Incentive Plan by and between
Churchill Downs Incorpor
Carstanjen and William E. Mudd†

ated and each of William C.

Form of Restricted Stock Unit Agreement pursuant to the
2016 Omnibus Stock Incentive Plan by and between
Churchill Downs Incorpor
Carstanjen and William E. Mudd†

ated and each of William C.

First Amendment to the Churchill Downs Incorpor
Amended and Restated Incentive Compensation Plan (1997),
effff eff ctive November 14, 2008†

ated

Churchill Downs Incorpor
Plan, effff eff ctive Januaryrr 1, 2013†

ated Executive Annual Incentive

Exhibit 10.1 to Current Report on Form 8-K
fiff led November 5, 2018

Exhibit 10.2 to Current Report on Form 8-K
fiff led November 5, 2018

Exhibit 10 (vv) to Annual Report on Form 10-
K forff
the fiff scal year ended December 31,
2008 fiff led March 4, 2009

Exhibit A to Schedule 14A fiff led May 3, 2012

Numbers

Descriptionp

By Refeff rence To

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

Churchill Downs Incorpor
rr
Incentive Plan, effff eff ctive as of Januaryrr 1, 2022†

ated 2022 Executive Annual

Exhibit 10.1 to Current Report on Form 8-K
fiff led August 4, 2022

Form of Churchill Downs Incorpor
Director Restricted Share Units Agreement†

ated Non-Employee

Exhibit 10(a) to Quarterly Report on Form
10-Q forff
the fiff scal quarter ended June 30,
2016 fiff led August 3, 2016

First Amended and Restated Churchill Downs Incorpor
2000 Employee Stock Purchase Plan†

ated

Exhibit B to Schedule 14A fiff led March 29,
2016

Churchill Downs Incorpor
President & Other Key Employee Severance Policy
(Amended Effff eff ctive as of December 1, 2015)†**

ated Senior Vice President, Vice

Executive Change in Control, Severance and Indemnity
Agreement, dated as of October 30, 2018, by and between
ated and William C. Carstanjen†
Churchill Downs Incorpor

Exhibit 10.3 to Current Report on Form 8-K
fiff led November 5, 2018

Exhibit 10.4 to Current Report on Form 8-K
fiff led November 5, 2018

Exhibit 10.1 to Current Report on Form 8-K
fiff led October 2, 2019

Exhibit 10.1 to Current Report on Form 8-K
fiff led July 30, 2020

Executive Change in Control, Severance and Indemnity
Agreement, dated as of October 30, 2018, by and between
Churchill Downs Incorpor

ated and William E. Mudd†

Change in Control, Severance, and Indemnity Agreement,
dated as of October 1, 2019, by and between Churchill
Downs Incorpor

ated and Austin W. Miller†

Executive Change in Control, Severance and Indemnity
Agreement, dated as of July 27, 2020, by and between
Churchill Downs Incorpor

ated and Marcia A. Dall†

Executive Change in Control, Severance and Indemnity
Agreement, dated as of July 26, 2022, by and between
Churchill Downs Incorpor

ated and Maureen Adams†**

Executive Change in Control, Severance and Indemnity
Agreement, dated as of July 26, 2022, by and between
ated and Brad Blackwell†**
Churchill Downs Incorpor

F
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1
1
0
0
-
-
K
K

10.33 Memorandum of Understanding by and between Austin W.

Miller and Churchill Downs Incorpor
2022†

ated dated Februarr

ryrr 10,

Exhibit 10.1 to Current Report on Form 8-K
fiff led Februarr

ryrr 10, 2022

10.34

10.35

10.36

10.37

10.38

Lease Agreement, dated as of Januaryrr 1, 2002, by and
between the City of Louisville, Kentuct ky and Churchill
Downs Incorpor

ated

Exhibit 2.1 to Current Report on Form 8-K
fiff led Januaryrr 6, 2003

Class Action Settlement Agreement, dated as of July 24,
2020, by and between Kater et al. and Churchill Downs
rr
Incorpor

ated et al.

Exhibit 10(kk) to Annual Report on Form 10-
the fiff scal year ended December 31,
K forff
ryrr 24, 2021
2020 fiff led Februarr

Amended and Restated Stockholder’s Agreement, dated as
of June 9, 2017, by and between Churchill Downs
rr
Incorpor

ated and CDI Holdings, LLC

Exhibit 10.2 to Current Report on Form 8-K
fiff led June 12, 2017

Credit Agreement, dated as of December 27, 2017, by and
among Churchill Downs Incorpor
rr
guarantors party thereto, the lenders party thereto, JPMorgan
Chase Bank, N.A. and PNC Bank, National Association

ated, the subsidiaryrr

Exhibit 4.3 to Current Report on Form 8-K
fiff led December 27, 2017

First Amendment to Credit Agreement, dated March 16,
2020, among Churchill Downs Incorpor
guarantors party thereto, the lenders party thereto, JPMorgan
Chase Bank, N.A., and PNC Bank, National Association

ated, the subsidiaryrr

Exhibit 10.1 to Current Report on Form 8-K
fiff led March 16, 2020

By Refeff rence To

Exhibit 10.1 to Current Report on Form 8-K
fiff led April 29, 2020

Exhibit 10.2 to Current Report on Form 8-K
fiff led Februarr

ryrr 2, 2021

Exhibit 10.1 to Current Report on Form 8-K
fiff led March 18, 2021

Exhibit 10.01 to Current Report on Form 8-K
fiff led April 14, 2022

Numbers

Descriptionp

10.39

10.40

10.41

10.42

31(a)

31(b)

Second Amendment to Credit Agreement, dated April 28,
2020, among Churchill Downs Incorpor
guarantors and the lenders party thereto, and JPMorgan
Chase Bank, N.A., and PNC Bank, National Association

ated, the subsidiaryrr

Third Amendment to Credit Agreement, dated Februarr
2021, among Churchill Downs Incorpor
guarantors and the lenders parties thereto, and JPMorgan
Chase Bank, N.A.

ryrr 1,
ated, the subsidiaryrr

Incremental Joinder Agreement No. 1, dated March 17,
2021, among Churchill Downs Incorpor
ated, the credit
parties thereto, the Lenders party thereto and JPMorgan
Chase Bank, N.A

Fourth Amendment to Credit Agreement, dated April 13,
2022, by and among Churchill Downs Incorpor
ated, the
credit parties party thereto, the Lenders party thereto and JP
Morgan Chase Bank N.A., as agent

Subsidiaries of the Registrant**

Consent of PricewaterhouseCoopers LLP, Independent
Registered Public Accounting Firm**

Certififf cation of Chief Executive Offff iff cer Pursuant to Section
302 of the Sarbar nes-Oxley Act of 2002**

Certififf cation of Principal Financial Offff iff cer Pursuant to
Section 302 of the Sarbar nes-Oxley Act of 2002**

Certififf cation of Chief Executive Offff iff cer and Principal
Financial Offff iff cer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbar nes-Oxley Act
of 2002 (furff nished pursuant to RulRR e 13a-14(b))***

101 INS

Inline XBRL Instance Document**

101 SCH

Inline XBRL Taxonomy Extension Schema Document**

101 CAL

Inline XBRL Taxonomy Extension Calculation Linkbase
Document**

101 DEF

Inline XBRL Taxonomy Extension Defiff nition Linkbase
Document**

101 LAB

Inline XBRL Taxonomy Extension Labea
Document**

l Linkbase

101 PRE

Inline XBRL Taxonomy Extension Presentation Linkbase
Document**

104

Cover Page Interactive Data File (forff matted in inline XBRL
and contained in Exhibit 101)

†

Management contract or compensatoryrr plan or arrangement.

Filed herewith.

***

Furnished herewith.

ITEM 16.

FORM 10-K SUMMARYRR

None.

F
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on the Company's behalf by the undersigned, thereunto duly authorized.

CHURCHILL DOWNS INCORPORARR TED

SIGNATURES

/s/ William C. Carstanjen

William C. Carstanjen
Chief Executive Offff iff cer
(Principal Executive Offff iff cer)
Februarr

ryrr 22, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the folff
persons on behalf of the registrant and in the capaa

cities and on the dates indicated.

lowing

/s/ William C. Carstanjen

William C. Carstanjen
Chief Executive Offff iff cer

Februarr

ryrr 22, 2023

/s/ William E. Mudd
William E. Mudd
President and

Chief Operating Offff iff cer

(Director and Principal Executive

Februarr

ryrr 22, 2023

Offff iff cer)

/s/ R. Alex Rankin

R. Alex Rankin

Februarr

ryrr 22, 2023

/s/ Ulysses L. Bridgeman

Ulysses L. Bridgeman

Februarr

ryrr 22, 2023

(Chairman of the Board)

(Director)

/s/ Robert L. Fealy

Robert L. Fealy

Februarr

ryrr 22, 2023

(Director)

/s/ Karole F. Lloyd

Karole F. Lloyd

Februarr

ryrr 22, 2023

(Director)

/s/ Douglas C. Grissom

Douglas C. Grissom

Februarr

ryrr 22, 2023

(Director)

/s/ Paul C. Varga

Paul C. Varga

Februarr

ryrr 22, 2023

(Director)

/s/ Marcia A. Dall
Marcia A. Dall
Executive Vice President and

Chief Financial Offff iff cer

Februarr

ryrr 22, 2023

(Principal Financial and

Accounting Offff iff cer)

/s/ Andréa Carter

Andréa Carter

Februarr

ryrr 22, 2023

(Director)

/s/ Daniel P. Harrington
Daniel P. Harrington

Februarr

ryrr 22, 2023

(Director)

CHURCHILL DOWNS INCORPORARR TED
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(i(( n millions)s
Allowance forff

doubtfulff

accounts:

December 31, 2022
December 31, 2021
December 31, 2020

Balance
Beginning
of Year

Change in
Accounting
Standard

Charged
to
Expense

Deductions

Balance
End of
Year

5.4
4.9
4.4

— $
—
0.5

2.3
3.2
2.5

(2.0) $
(2.7)
(2.5)

5.7
5.4
4.9

(i(( n millions)s
Defeff rred income tax asset valuation allowance:

December 31, 2022
December 31, 2021
December 31, 2020

Balance
Beginning
of Year

Additions

Deductions

Balance
End of
Year

3.2
1.4
0.2

2.5
1.8
1.2

— $
—
—

5.7
3.2
1.4

F
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K
K

DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers

Executive Officers

William C. Carstanjen
Chief Executive Officer

William E. Mudd
President & Chief Operating Officer

Marcia A. Dall
Executive Vice President &
Chief Financial Officer

Bradley K. Blackwell
Executive Vice President &
General Counsel

Maureen Adams
Executive Vice President,
Gaming Operations

Directors

Ulysses L. Bridgeman, Jr.
Owner & CEO
Heartland Coca-Cola Bottling
Company, LLC

William C. Carstanjen
Chief Executive Officer
Churchill Downs Incorporated

Robert L. Fealy
Managing Director
Limerick Investments, LLC

Douglas C. Grissom
Managing Director
Madison Dearborn Partners

Daniel P. Harrington
President & CEO
HTV Industries, Inc.

Karole F. Lloyd
Former Vice Chair and Southeast
Regional Managing Partner,
Ernst & Young, LLC

R. Alex Rankin
Chairman of the Board,
Churchill Downs Incorporated
Chairman, Sterling G. Thompson Company,
LLC; President, Upson Downs Farm, Inc.

Paul C. Varga
Former Chairman and CEO
Brown-Forman Corporation

Corporate Office
Churchill Downs Incorporated
600 N. Hurstbourne Parkway
Suite 400
Louisville, KY 40222

Annual Meeting
Shareholders will attend the Annual
Meeting by visiting
www.proxydocs.com/CHDN at
9:00 a.m. Eastern time Tues.,
4/25/2023.

Stock Information
Churchill Downs Incorporated is
traded on the NASDAQ Global
Market under the ticker symbol
“CHDN.”

Transfer Agent and Registrar
American Stock Transfer & Trust
Company, LLC
59 Maiden Lane, Plaza Level
New York, NY 10038
Tel: (877) 715-0510

Other Information
Copies of our 2022 Annual Report on
Form 10-K and other filings with the
Securities and Exchange Commission
may be obtained without charge by
contacting our corporate office or
through our website:
www.churchilldownsincorporated.com

600 N. Hurstbourne Parkway, Ste. 400
Louisville, Kentucky 40222
Telephone: 502.636.4400
www.churchilldownsincorporated.com