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Churchill Downs Inc. reported record second-quarter results in July, but investors have focused on a different story: its plan to sell nine casinos.
CEO Bill Carstanjen says the move is about strategy, not weak performance, and that it will strengthen the company. He discussed the sales in a September interview on Horse Racing Nation’s Ron Flatter Racing Pod.
Why Churchill Downs is selling casinos
The company is selling nine casino properties in eight states and keeping its historical racing machine venues. The properties are:
- Calder Casino in Florida
- Terre Haute Casino Resort in Indiana
- Hard Rock Casino Sioux City in Iowa
- Oxford Casino in Maine
- Ocean Downs Casino & Racetrack in Maryland
- Riverwalk Casino Hotel and Harlow’s Casino Resort & Spa in Mississippi
- del Lago Resort & Casino in New York
- Presque Isle Downs & Casino in Pennsylvania
Ocean Downs and Presque Isle Downs also operate racetracks.
Carstanjen said Churchill Downs expanded heavily into casino gaming over the past decade and now wants to focus on what sets it apart: the Kentucky Derby, live racing, historical racing machines and online wagering. “We need to slim down,” he said, adding that the decision followed extensive deliberation, according to Horse Racing Nation.
He said the casinos remain solid businesses and that the sales reflect where the company sees its best long-term opportunities, not how the properties are performing. Proceeds are expected to pay down debt, according to Horse Racing Nation.
The company has also said it will invest selectively in Churchill Downs Racetrack and repurchase shares. Churchill Downs ended the second quarter with net bank leverage of 3.7 times, according to its earnings release.
Where the casino sale process stands
Carstanjen said the company is soliciting and weighing bids, and that the process is ongoing. Macquarie Capital is assisting with the sales. Churchill Downs has cautioned that it cannot guarantee a sale of every property, and the earnings release warned that the timing and completion of any transaction are uncertain.
The company has reshaped its portfolio before. In 2021, it sold Arlington Park near Chicago for $197 million after deciding not to build a casino there.
Record results, but Wall Street balks
The company reported second-quarter net revenue of $980 million, up 5% from a year earlier, and adjusted EBITDA of $477 million, up 6%. Both were records, and the quarter marked the sixth consecutive record second quarter for both measures. A record Derby Week drove much of the growth, according to the earnings release.
Investors were unmoved. The day after the announcement, Churchill Downs shares fell 7% to a six-year low. The stock has dropped 46% since its record high in May 2023, while the Nasdaq Composite has more than doubled over the same period, Horse Racing Nation reported. Two indexes tracking publicly traded gaming companies show a similar decline, most pronounced in 2025.
Why investors are cooling on gaming
Carstanjen said the challenge is how investors now view the industry. In his view, gaming has become less popular with public-company investors than it once was.
He pointed first to capital structure. Many operators sold their land and much of their cash flow to real estate investment trusts, which left them with fixed rent payments. That makes the operating business more volatile when revenue dips, he said, and it has shaken investors’ confidence in future earnings. Churchill Downs largely avoided that approach.
He also cited competition for investor attention from sports betting companies such as DraftKings and FanDuel, and from prediction markets such as Kalshi and Polymarket. Together, he said, these developments have made investors more cautious.
Prediction markets and racing rights
Carstanjen declined to speculate on whether a prediction market might sponsor a race, noting that public company executives must be careful with hypotheticals. He was clear about protecting the company’s rights, however.
He said the Interstate Horseracing Act effectively gives Churchill Downs control over who can accept wagers on its races. That wagering revenue funds purses. Churchill Downs has held discussions with Kalshi and Polymarket, but neither has the right to take bets on its races, he said.
He also urged the industry not to be dismissive of the pari-mutuel betting system, which he called one of the strongest funding models for racing in the world.
What comes next for Churchill Downs
The strategy’s success depends on more than completing the sales. Churchill Downs must secure attractive offers, reduce debt and show that a leaner company can deliver stronger returns.
