A return to normalcy at the Kentucky Derby (G1) and continued success in its historical horse racing venues in Kentucky, as well as burgeoning operations in Virginia fueled a record-breaking year for Churchill Downs Inc. in 2022.
In its full-year and fourth quarter report of business results released after trading closed Feb. 22, the Louisville, Ky.-based company reported record net income of $439.4 million, up 76% compared with $249.1 million in 2021. Adjusted earnings also reached a record at $763.6 million.
CDI reports that Churchill Downs racetrack saw a $77.6 million increase in net revenue primarily due to the running of the 2022 Kentucky Derby without capacity restrictions that were in place in 2021 as well as a $67.8 million increase driven primarily by growth at HHR operations tied to Turfway Park, Churchill (Derby City Gaming), and Oak Grove (a Standardbred track).
CDI also reports $8 million in revenue attributable to properties acquired in its purchase of Ellis Park and its HHR operations as well as Chasers Poker Room in Salem, N.H.
On Nov. 1, 2022, CDI completed its $2.75 billion acquisition of essentially all assets of Peninsula Pacific Entertainment, which included Colonial Downs racetrack, six HHR venues in Virginia, and rights to properties being developed in Dumfries and Emporia, along with rights to up to five more HHR facilities in Virginia (as well as casinos in New York State and Iowa). That purchase is paying immediate dividends for the company.
CDI reports that net revenue for the fourth quarter of 2022 increased $87 million from the prior year quarter primarily due to $62.4 million in revenue attributable to the Virginia properties. Adjusted earnings for the fourth quarter of 2022 increased $30.6 million from the prior year quarter primarily due to a $30.1 million increase attributable to the Virginia properties.
Net revenue for 2022 increased $215.8 million primarily due to $62.4 million in revenue attributable to the Virginia properties and adjusted earnings for 2022 increased $112.5 million due to a $30.1 million increase attributable to the Virginia properties.
The company did report decreased revenue of $16.2 million at its TwinSpires.com platform primarily due to a decrease in pari-mutuel wagering as a higher portion of patrons returned to wagering at brick-and-mortar locations instead of wagering online and following the first quarter 2022 decision to exit the direct online sports and casino business. In leaving that segment, CDI reports a $40 million increase in adjusted earnings thanks to decreased marketing and promotion, which led to a $31.4 million increase in adjusted earnings for the TwinSpires.com segment.
Other highlights of 2022 reported by the company include completing the sale of land that had been tied to the former Calder Race Course for $291 million. In a sale that fell in the first quarter of 2023, the company closed on property tied to Arlington International Race Course in Arlington, Ill., in a $197.2 million purchase of that land by the NFL's Chicago Bears.
